TM EA 2010

2012 AnnuAl report

GROUp CORpORATE COMMUNICATIONSTelekom malaysia Berhad

(128740-p)

level 8 (South Wing), Menara tM, Jalan pantai Baharu,50672 Kuala lumpur, Malaysia

www.tm.com.my @tmcorp

2012 An

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(128740-p)

you’re getting services from a name you know and trust, backed by years of experience.With an incredible range of content and high speed

connections, be it Streamyx or UniFi for homes, with complete end-to-end solutions for businesses, TM offers faster, richer

and a more reliable customer experience. Whether it’s entertainment, information or communications,

Because, with

we help you connect,communicate and collaborate.

Trust us.We know broadband best.

Our customers can count on us to deliver.

After all, we areYour Broadband Champion.

momentouscourageousfocus

ambitious

continuousg e n e r o u s

6 Chairman’sStatement

12 Group Chief ExecutiveOfficer’s Statement

20 TheTelecommunicationsSector: Review &Outlook

24 Strategic Journey27 Group Financial

Highlights29 Simplified Group

Statement ofFinancial Position &Segmental Analysis

31 Group QuarterlyFinancialPerformance

32 Investor Relations35 Stock Performance37 Financial Calendar

40 Corporate Profile42 Milestones Over Two

Centuries46 Media Milestones in

201248 2012 Corporate

Events54 Awards &

Recognition 201256 TM Past Awards64 Corporate

Information66 Contact Us68 Group Corporate

Structure70 Group Organisation

Structure

72 Board of Directors74 Profile of Directors82 Group Leadership

Team84 Profile of

Management Team90 Statement On

CorporateGovernance

112 Directors StatementOn Risk Management& Internal Control

121 Audit CommitteeReport

128 Statement on InternalAudit

132 Board RiskCommittee Report

136 Business ContinuityManagement (BCM)Report

139 AdditionalComplianceInformation

143 Corporate Integrity

146 Group FinancialReview

151 Statement of ValueAdded

152 Distribution of ValueAdded

153 TM Group Products& Services

PERsPECtiVE CORPORatEPROfilE

lEaDERsHiP &aCCOUNtaBilitY

PERfORMaNCEREViEW

insidethis report

pg5 pg39 pg71 pg145

156 Retail Business 157 Consumer 159 Small And

Medium Enterprise

162 Enterprise 164 Government166 Wholesale

Business170 Global Business175 VADS180 New Media184 Support Business192 IT&NT Powering

TM’s CustomerExperience

196 Box Article– TM’s E3 INFRA

200 International &DomesticInfrastructure &Trunk Fibre OpticNetwork

202 TM WorldwideCoverage

206 CustomerExperience

210 Box Article –Social Media:Redefining

CustomerExperience

214 TM – TheEmployer ofChoice

219 Safety ComesFirst

224 CorporateResponsibility

236 Statement ofResponsibility byDirectors

237 Directors’ Report242 Income Statements243 Statements of

ComprehensiveIncome

244 Statements ofFinancial Position

246 ConsolidatedStatement ofChanges in Equity

248 Company Statementof Changes in Equity

250 Statements of CashFlows

251 Notes to theFinancial Statements

380 SupplementaryInformation

381 Statement byDirectors

381 Statutory Declaration382 Independent Auditors’

Report

384 Authorised andIssued Share Capital

387 Analysis ofShareholdingStatistics

388 List of Top 30Shareholders

390 Net Book Value ofLand & Buildings

391 Usage of Properties392 Group Directory399 Glossary404 Notice of Annual

General Meeting408 Statement

Accompanying Notice of 28th AGM

• Proxy Form

BUsiNEss REViEW& fUNCtiONs

KEY iNitiatiVEs fiNaNCialstatEMENts

OtHER iNfORMatiON

pg155 pg205 pg234 pg384

DatE 7May2013,TuesdaytiME 10.00a.m.VENUE KristalHall,TMConventionCentre, MenaraTM,JalanPantaiBaharu, 50672KualaLumpur,Malaysia

annual General Meeting28th

“TobeMalaysia’sleadingnewgenerationcommunicationsprovider,embracingcustomerneedsthroughinnovationandexecutionexcellence”

Toachieveourvision,wearedeterminedtodothe following:

• Strivetowardscustomerserviceexcellenceand operational efficiency

• Enrich consumer lifestyle and experienceby providing innovative new generationservices

• Improve the performance of our businesscustomers by providing high valueinformationandcommunicationssolutions

• Delivervalueforstakeholdersbygeneratingshareholder value and supportingMalaysia’s growth and development

Kristal Song

WithfullcommitmenttoourcustomersWestrivetogiveourverybestShowinggreatunderstandingKeepinganopenmindatalltimes

Behonest,sincereandtrustworthyTofriends,colleaguesandallAlwayswithrespectforoneanotherWorkingwiththeutmostdedication

Chorus:LetusmoveforwardasoneProvidingexcellenceinserviceOvercomingallobstaclesSurelywecanbethebest

MayTMcontinuetosucceedGuidedbyvisionaryleadershipAndwithourunitedfoundationMayTMforeverbetheprideoftheNation

VisionMission““Kristal Values

1. TotalCommitmentToCustomers2. UncompromisingIntegrity3. Respect&Care

2

Telekom Malaysia BerhadAnnual Report 2012

www.tm.com.my

connectcommunicatecollaborate

CUstOMER

ONE

OPERatiONal

lEaDERsHiP

Centricity and Quality improvements

We constantly push boundaries to remain ahead inthe industry. By focusing on customer satisfaction,we enhance the quality of experience for our valuedcustomers at all touch points.

Company Mindset with Execution Orientation

With a seamless transition of human capital gearedtowards the expansion of High Speed Broadband(HSBB),wearepoisedto functionasanorganisationfocused on enhancing skills development to betterserve our customers.

Excellence and Capital Productivity

By increasing the efficiency of our operations andcost, we are able to optimise capex investment, intandem with increasing the efficiency of our capitalmanagement.

through innovation and Commercial Excellence

Our management strategies are distinguished byinnovation and commercial excellence, primed toachieve business and customer growth by improvingvalue propositions and sales effectiveness.

In line with being Malaysia’s Leading New-Generation Communications Provider, we have introduced and implementeda Performance Improvement Programme (PIP 2.0) to embrace our customers’ needs through constant innovation andexecution excellence.

The four strategic thrusts of PIP 2.0 are:

furtherTaking success with

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www.tm.com.my

broadbandproviderinMalaysia1No.

employeesTM’smostvaluableasset27,257

highestrevenuegrowthintheindustryat9.2%RM9.99 billionrevenue

premisespassedforhighspeedbroadbanddeployment

broadbandcustomersmorethan

1.377 million

2 million

totalreturntoshareholders(TRS)37.4 %

Facts at aGlancemilliontotaldividendpayoutRM787.0

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www.tm.com.my


6 Chairman’sStatement12 GroupChiefExecutiveOfficer’sStatement20 TheTelecommunicationsSector:Review&Outlook24 StrategicJourney27 GroupFinancialHighlights29 SimplifiedGroupStatementofFinancialPosition&

SegmentalAnalysis31 GroupQuarterlyFinancialPerformance32 InvestorRelations35 StockPerformance37 FinancialCalendar

Perspective

trust

As your Broadband Champion, we are always pushing boundaries to lead the industry in the pursuit of better performance, product and service quality and heightened customer experience.

Dear Shareholders,

It is my great pleasure to report to you on a year that has been remarkable and rewarding, historic and hopeful.

A year where we strengthened our position as a trusted corporate citizen, building on the foundation of integrity and transparency in our operations, and created greater shareholder value. A year when we not only fulfilled, but surpassed our promise to deliver the roll-out target of 1.34 million premises passed under the high speed broadband (HSBB) project, as set out in the landmark Public-Private Partnership (PPP) agreement with the Government from years ago.

ChaiRMan’SSTaTeMenT

Ayearwhenwetookourroleasthenation’strustedpartnerindevelopmentandleadingnewgenerationcommunications’service provider to the next level, further increasing thereach and quality of a significantly enhanced broadbandlifestyle to thepeople.Ayearwhenweachievedwhatcouldbe thought of as impossible only a few years ago – a fixedline operator registering the highest revenue growth in thetelecommunicationsindustry.

ItisindeedanexcitingperiodinthehistoryofourCompany.The demerger in 2008 gave us the opportunity to re-inventourselves, gaveusthefocusweneededtobuildanewandsolid foundation forgrowth.We improvedour fundamentalsand prepared our people for the challenges and changesahead.Whentherubberhit theroad, Iamheartenedtosaytheyrosetotheoccasionanddeliveredwhatwasexpectedofthemyearafteryear.

This passion and commitment shown by our employees aswell as management, make me optimistic and hopeful thatweareonlyatthestartofthistremendousjourney,andthatmanymoreoutstandingsuccessesawaitusthehorizon.

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Perspectivewww.tm.com.my


DELIVERING VALUE FOR OUR SHAREHOLDERSIampleasedtoreportthatin2012,TMregisteredourstrongestfull year performance to date since the demerger exercise.WemetallthreeHeadlineKeyPerformanceIndicators(KPIs)withacommendablerevenuegrowthof9.2%,EarningsBeforeInterest,TaxDepreciationandAmortisation(EBITDA)marginof 32.3% and customer satisfaction measure of more than72.0,wellabovetheglobaltelcoaverageof68.0.

The9.2%revenuegrowthwasmoreover thehighestamongtheindustry’smajorplayers,andamongthehighestoffixedline operators globally. This indeed adds to the sense ofachievementofourCompanyandbodeswellforourfuture.

Profit After Tax And Minority Interest (PATAMI) for FY2012grewby6.1%toRM1.26billionascomparedtoRM1.19billionin 2011. Excluding mainly the gain on deferred tax incomeand unrealised forex gain, our normalised PATAMI stoodat RM881.0 million, an increase of 38.8% against RM634.8millionin2011.

WefurthersubstantiatedourclaimasMalaysia’sBroadbandChampion with a 7.4% growth in our customer base, from1.92 million in 2011 to 2.07 million in 2012. UniFi coveragereached1.377millionpremisespassedin96exchangeareas,exceedingourpromisetotheGovernmentof1.34million.Bytheendof2012,wehadmorethan482,000Unificustomers.As of the third anniversary of HSBB, on 24 March 2013, wehad activated more than 520,000 UniFi customers, whichtranslatestoatakeuprateofmorethan37.0%,goingbeyondglobalbenchmarksofsimilarserviceroll-outs.

To you our shareholders, in line with our continued focuson strong and sustainable returns, I am also pleased toannouncethattheTMBoardofDirectorshasrecommendeda final dividend payout of 12.2 sen per share on top of theinterimdividendof9.8senpershareamountingtoRM351.0million distributed in September 2012. This brings the totaldividendpayoutto22.0senpershare,amountingtoRM787.0million. With the interim dividend, TM has met its dividendcommitmentofRM700.0millionorupto90.0%ofnormalisedPATAMI,whicheverishigher.

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Perspective www.tm.com.my

Chairman’s Statement

Lookingback, itwasnotbyanymeansaneasyfeat.ItcouldnothavebeendonewithoutthesupportoftheGovernmentnorthededicationofour27,257strongworkforce. Our people have managedto maintain existing operationswhile undergoing tremendoustransformation,bothasanorganisationandonanindividualbasis,todeliverthisnew technology service. On that note,I would like to take this opportunityto say how proud I am of every singlememberoftheTMfamily,fortheirhardwork, dedication and perseverance,but most of all for their belief in oursharedfuture.

With the HSBB and Internet Protocol(IP) infrastructure in place, TM is abig step closer towards our vision ofbecoming an Information Exchange.AsanInformationExchange,wheneverthereisaflowof informationfromoneuser to another, no matter where theyarenorwhosecustomers theyare,webelievethatinformationwilltouchTM’sphysical and virtual ‘network’ at somepointinthattransfer.

This is in line with prevalent trends inthe industry, particularly with respectto customer behaviour and theirexpectations of being able to chooseservices and content – regardless oflocation,technologyordevice.

HSBB is a pervasive infrastructure,capable of carrying huge amounts ofdata and information, from basic voicetothemostsophisticatedofInformationand Communications Technology (ICT)services.Italsopromisedtobeaneutralinfrastructure, open for other serviceproviders to use. In fact, a number ofmajorprovidershavetakenupcapacityin our HSBB network, and they nowuse it tocarry traffic toand fromtheirowncustomers.

Thispositionthatwehavestrategicallymoved ourselves into puts us right inthe middle of the communication grid,with information among users flowingall around us, and inevitably throughus. This is true to our InformationExchangevision.

TRUSTED PARTNER IN NATIONAL DEVELOPMENTThe Economic TransformationProgramme (ETP) introduced bythe Government aims to propel thenation into high income status by theyear 2020. Broadband, and HSBB inparticular,isthecatalystformanyoftheNationalKeyEconomicAreas(NKEAs),whose industrygrowthwouldbemademuch faster with leading edge ICTinfrastructureandservices.

Broadband has the potential torevolutionise the way Malaysianslive, work and play, while deliveringreal economic benefits via increasedproductivity, and this is already provenintheenhancedlifestylesofTM’smorethan2.0millionbroadbandcustomers.It will also spur the development ofthe domestic content industry ande-commerce.AccordingtoaWorldBankstudy, a 10.0% increase in householdbroadband penetration can increaseGross Domestic Product (GDP) growthbymorethan1.0%.

TMmeanstomakegoodonouraspirationto become Malaysia’s broadbandchampion and the leading newgeneration communications provider.WhileweworktowardsdeliveringonthePPP,weremainalwaysmindfulofTM’srole in nation-building, as a catalystand key driver of the CommunicationsContentandInfrastructure(CCI)NKEAaswellastheNationalBroadbandInitiative(NBI).Moreover,weremaincommitted

WeareparticularlypleasedthatTMhasnotonlymetourdividendcommitmentto our shareholders year after year aspromisedsince thedemerger,but thatfor the first time, we have exceededthe RM700.0 million payout mark. Forthe year ended December 2012, wedeliveredatotalreturntoshareholders(TRS) of 37.4%. From the date of ourdemerger inApril2008 to thepresent,our TRS is a very impressive 237.1%,making it among the best in the telcosector. On behalf of TM, I would liketo take this opportunity to thank ourloyal shareholders for their continuedinvestment and confidence in theCompany.

DELIVERING HIGH SPEED BROADBAND2012 was yet another milestone year,duringwhichwesuccessfullydeliveredtheroll-out targetof theHSBBprojectas promised in the PPP, acclaimingglobal recognition as the fastestand most comprehensive of its kind intheworld.

The Government of Malaysia, fullyrealising the positive impact ofbroadband on the development of thecountry, had taken a bold step by co-investing in the HSBB project, markedby the signing of the PPP agreementwith TM in 2008. Since then, TM hastakenthebatonandhasrunwithit.WecommittedtoofferthefirstcommercialservicetoMalaysiansinthefirstquarterof 2010, and we did. We committed tofully complete the project by end-2012withcoverageof1.34millionpremises,and we did, achieving 1.377 millionpremisespassed.

Itwasaglobally-acclaimedsuccess,interms of the scope of this endeavour,the speed of its completion as wellas its take-up rate. We have receivedencouraging remarks from regionaland internationalbodiessuchasFTTHCouncil Asia Pacific, BT Teleconsult,McKinsey & Co, and the EuropeanCommission.

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to the Government-linked Company(GLC) Transformation Programmeand ultimately to our shareholders inincreasingshareholdervalue.

HSBB is also a strategic initiative inthat it can help the country achieveits objective of inclusiveness. Thisobjective is intrinsic to the philosophyof 1Malaysia, where no citizen shouldbe left out of the development andprosperityofthenation.ICTisindeedacriticalenablerofthisvision–providingaccesstoinformationandtoolsthatcanhelp increase the standard of living ofallMalaysians.

Inclusiveness firstly requires ubiquityof network. TM has long been a closepartner to the Government towardsthisend.Sincethefirsttelephonelineswerelaidinthecountrymorethan120years ago, we have strived to ensureour extensive telecommunicationinfrastructure reaches Malaysiansnationwide. With this network actingas a base, many applications thatbring convenience and efficiency toindividuals,businessesandGovernmentcan be carried on top of it. The moresophisticated the applications, thefaster and more reliable the networkneeds to be. HSBB is designed to playthisrolenowandwellintothefuture.

This philosophy of inclusiveness isalsoat thecoreof theDigitalMalaysiaprogramme, which seeks to createan ecosystem that promotes the useof ICT in all aspects of the economy.UnderDigitalMalaysia,allcommunitieswill be empowered to connect globallyand interact in real time resulting inincreased GDP, enhanced productivityand improved standards of living.Onceagain,TMwithourextensiveandsophisticated telecommunicationsinfrastructure, remains excited to

support thisgoal,andtocontinueasatrusted partner in the development ofourgreatnation.

TRUSTED CORPORATE CITIZEN TM places the highest priority inconductingourbusinesswith integrity,transparency and strong governance.One of the National Key ResultArea (NKRA) under the GovernmentTransformation Programme (GTP)focuses on Fighting Corruption, andI am proud to report that TM is at theforefront among corporate Malaysia inthisarea.

We fully support the National IntegrityPlan (NIP), which advocates enhancedcorporate governance, business ethicsandcorporatesocialresponsibility.Thesame year the NIP was launched, in2004,TMproducedourCodeofBusinessEthics(CBE)intheformofahandbook.In 2010, we became the first GLC tooffertheCBEasane-learningmodulefor easy reference by employees.In 2011, our efforts intensified withthe signing of a Corporate IntegrityPledge.WealsosignedaMemorandumof Understanding (MoU) to becomea ‘Rakan Integrity’ of the Instituteof Integrity Malaysia (IIM), whichcommitsustoplanning,implementing,executing, overseeing and evaluatingthe principles as contained in the NIPwithin the Company. Then in January2012, we launched our Integrity Pact,which is an agreement between TMand our vendors to perform businessdealings free of bribery and corruptpractices.

2012was the yearwhenwe reinforcedawareness on integrity among ouremployees.Buildingupononeofourcorevaluesof“UncompromisingIntegrity”,astructuredcampaignwasimplemented

throughouttheyear,withconstantandconsistent communication, deliveredthrough nationwide road shows aswell as talks. TM leaders have alsoplayed their role to remind and guidetheir team.Themessageof integrity, Ibelieve,has reachedevery levelofourworkforce,andthereisnowheightenedknowledgeandappreciationamongourpeopleofthisimportantvalue.

CORPORATE RESPONSIBILITY AND SUSTAINABILITYIn our transformation journey, theagenda of corporate responsibility andsustainability has been ingrained inour actions and decisions, from theboardroom in setting the direction ofsustainability initiatives to be driventhroughouttheorganisation,downtoallworkingandoperational levelsofTM’sbusiness,touchingmanyoutsideofTMaswell.

TM has always advocated balancebetween our bottom line and ourrole as a responsible corporatecitizen, approaching it from the fourdimensionsofworkplace,marketplace,communityandenvironment.Thelattertwo dimensions are further brokendown into three Corporate SocialResponsibility (CSR) pillars, namelyCommunity/Nation-building, EducationandtheEnvironment.

In the workplace, our employees orWarga TM continue to exemplify theirpassion for TM through increasedteamwork and a collaborative spirit.Our focus on internal engagementprogrammes and on consistent andregularopendialoguewithTMleadershave played an important role inensuring our workforce is fully onboard with the task at hand and ourbusiness objectives. This has resultedin our Employee Engagement Index(EEI) known as My1TM Survey hitting

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Chairman’s Statement

anallrecordhighon90.0%in2012with85.0% staff participation. This scoreexceedsthatofglobalhighperformingcompanies on the same benchmarkscale; a testament to the energy ofWargaTM.

In the marketplace, TM madecommendable progress in our effortsto improve Customer Experiencein a year that was dedicated to thesame. In particular, TM had a greatyear for Social Media management,where we firmly established TM as alistening organisation that engageswithourcustomers,throughouractiveTwitter accounts @TMCorp, for latestupdatesandcoporatenews,aswellas@TMConnects,ourdedicatedcustomerservice channel which complementsoursuiteofothertraditionalchannels.

Under the Education pillar, in 2012we continued to be directly involvedwith various levels of the educationsystem in the nation, from our SchoolAdoption Programme which aims toboost the academic performance ofrural schools through ICT, all the wayto providing opportunities for highereducation and skills development atthe Multimedia University (MMU) andMultimedia College (MMC). All thesewere further strengthened by YayasanTM, a foundation that has providedscholarships to more than 13,000deservingstudents.

Weaddedourfirstspecialneedsschool,Sekolah Kebangsaan Pendidikan KhasPekan Tuaran, Sabah, being also thefirst GLC under PINTAR Foundation’sfraternity to do so, as well as SekolahMenengah Kebangsaan Chenderiang,Perak,whichhasasizeableOrangAslistudent population, to our family of 12adopted schools in total to date. ThisfurthersouraimofmoreinclusivenessinourCorporateResponsibility(CR).In

exploringmoreonprogrammesrelatingto Orang Asli students, one school inPahang will be launched as anotherPINTAR school soon, together with aschoolinSelangorfor2013.

Under the Community/Nation-buildingpillar, we continue to support theGovernment’s Universal ServiceProvision (USP) vision of achievinguniversal access, universal coverageand universal service, in line with theintention to bridge the digital divideamongst Malaysians. In doing so, TMas Malaysia’s Broadband Champion,commissioned and collaborated onvarious initiatives together with ourMinistry and regulatory body. Theseincluded the Community BroadbandCentre(CBCs)orPusat Internet 1Malaysia(PI1M),CommunityBroadbandLibraries(CBLs)orPerpustakaan Jalur LebarandKampung Tanpa Wayar all of which areaimedatachievingthetargetsetbytheNBI of 75.0% household penetrationby2015.

TM is also taking a proactive role inalleviating poverty and helping toprovide a more sustainable livelihoodfor single mothers and their familiesthroughProgramSejahtera.In2012,theefforts for the pilot project in Pahangfinallyborefruitafterthreeyearswhentwo daughters from different familiesgraduated with flying colours, bringingtheir hard-earned Diplomas homefor their mothers to be proud of andconsequently,wereofferedtobeapartofTM’sfamilythroughemploymentwithus.Thesuccessofthispilotprogrammehas encouraged us to kick off thesecond phase of Program Sejahtera,this time in Kelantan. Five familieshavebeenselectedinthestate,tostarttheir journey to a better quality of life.With the collaboration with YayasanSejahtera and Yayasan Pendidikan &Vokasional Wanita Malaysia (YPVWM),

the participants of the programme areset to realise their greater potentialnextyear.

Iamalsoproudoftheprogresswehavemade under the Environment pillar.2012 saw us embark on our CarbonManagement Plan, by streamliningour environmental data collectionand monitoring process throughoutthe Group. As 1TM, we see this asan opportunity to be an even moretransparent Company in measuring,monitoring and reporting ourenvironmentalfootprint.

At thesametime,wealsobelieve thateachoneofushas thepower tomakea positive impact on the environmentand our general surroundings. I amheartenedtoseetheactiveparticipationshownbyouremployeesintheinternalenvironmental programme, BumiKu.More activities were rolled out duringthe year under this initiative includingBumiKuFunRun,BumiKuGreenWeek,‘Gotong-Royong 1TM’ which was heldsimultaneously nationwide, and ourflagship BumiKu Camp. This spirit ofvolunteerisminTMalsoextendsitselftoallourcommunityandCRprogrammes,where employees get involved to helpmakeeacheventameaningfulsuccess.

Externally, we continue to expand ourreach to achieve greater impact bycollaborating with other organisationsthat share the same aspirations.We have been partnering with theMalaysian Nature Society (MNS) inconductingtheTMEarthCamps,whichentered its third year in 2012. Theseries of six nationwide nature campsaims to increase students’ awarenessof Malaysia’s rich biodiversity throughreal-lifeexperience,inthehopethattheywillsharetheirappreciationofnature’sbeauty with friends and family, whilebuildingthefoundationforaheightened

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appreciation of the environment forgenerationstocome.Ensuringthatwecontinually ‘connect the dots’ in ourapproach to CR, we invited studentsfromouradoptedschoolstobeinvolvedwith community work during thesecamps.Oursubsidiaries,MenaraKLandMuzium Telekom often come on boardwith educational and environmentalactivities of their own with respect toourhistoryandheritage.

Further, as we migrate from legacydigitalintoafullyIPbasednetwork,weare coincidentally becoming ‘greener’,as this requires less energy and lessspace to operate, thus minimisingour carbon footprint and wastage.We have also introduced an unofficialbrand name for our network: TM E3

Infra – Efficient, Effective, Elastic,demonstrating the enhanced featuresofourinfrastructure.

Our 2012 Sustainability Report providefurther details of our CorporateResponsibilityprogrammes.

PROSPECTSAlthough we anticipate that thebroadband space will be morecompetitive in the coming year, weare optimistic that we can meetthese challenges with the high valuepropositionofourproductsandservices.The competitive landscape continuesto evolve with the entrance of newplayersintothemarket,andweexpecttocontinueseeinghealthycompetitionfrom fellow broadband providers. TMalways welcomes competition as itfosters more innovative services andoptions which ultimately benefits theenduser/consumer.

As for TM, we remain committed asMalaysia’s Broadband Champion tobring an enhanced and integrateddigital lifestyle to Malaysian homesand businesses through our full andcomprehensive suite of broadbandservices. We will continue to deliverhigh speed broadband via both UniFiandStreamyx,intermsofinfrastructureand services, both of which areundergoing continuous improvementsin our efforts to deliver the desiredcustomer experience. UniFi alreadydeliversspeedsof5,10,20,30and50Mbps while Streamyx offers speeds of4 and 8Mpbs. There are many excitingproduct and services developmentsbeing planned, which will increasinglyprove to be technology neutral withfocus on lifestyle benefits. We remaintruetotheintentiontodeliverHSBBandBroadband for the General Population(BBGP) in our holistic approach toproviding broadband to the nationacrossallsegments.

After thesuccessful implementationofthe second phase of our performanceimprovementprogramme (PIP)2.0,wehave embarked on our third phase ofPIPorPIP3.0asfurtherexplainedinourGroup Chief Executive Office’s (GCEO)statement. Against this backdrop, TMissettotakeitsstageofgrowthtothenextlevel.

ACKNOWLEDGEMENTS

On behalf of the Board of Directors,I wish to put on record our utmostgratitudetoourshareholdersandotherstakeholdersforyoursteadfasttrustinus, particularly in our efforts to bringthe Company to greater heights. We

will continue to work hard to ensurewe create value for you in all that wedo. We thank our customers, businesspartnersandthemediaforyourloyaltyand support. To the Governmentand regulator, TM reinforces ourcommitment to support the agendaof industry development and aknowledge economy through theproliferationofICT.

To my fellow Board members, thankyou for your active participation andcontributionatallBoardandCommitteemeetings.YourwisdomandvisionhaveguidedtheCompanythroughthehighsandlowsofourtransformationjourney.To the Management – your dedication,drive and determination have helpedtranslate our vision into businessresultsandreturnstoourstakeholders.

Last but not least, we take our hatsofftoeachandeveryoneofthe27,257employees of TM. With a strongone-company mindset, you havedemonstrated yet again the powerof passionate teamwork. Withoutyour perseverance and commitment,we would not have achieved suchtremendous success. I trust that wewillcontinuetoprovethatwhenweputour hearts, our heads and our handstogether, we are capable of an evengreaterfuture.

Dato’ Sri Dr Halim ShafieChairman

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TM has every reason to celebrate the achievements of 2012 – for this we are extremely grateful. Thanks to the incredible energy and tireless dedication of our people, as well as with the unwavering support from all our stakeholders, we have delivered a truly spectacular year – recording not only the highest revenue growth in the industry for the full year ended 31 December 2012 at 9.2%, but the highest revenue growth since our historic demerger in 2008.

TM has also fulfilled, and even surpassed, the commitment we made with the Government of Malaysia under the HSBB PPP Agreement to roll-out 1.34 million premises passed by the end of 2012; achieving 1.377 million premises passed. We maintain our broadband leadership, with over 2.0 million customers, and with over 520,000 UniFi customers by the third anniversary of HSBB on 24 March 2013; together with our commitment to an enhanced customer experience.

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Forourvaluedshareholders,TMhasnotonly met our dividend commitmenteveryyearsincedemerger,butweareespeciallypleasedthatforthefirsttime,TMhasexceededtheRM700.0millionpayoutmark,withatotal2012payoutofRM787.0million. Inpursuingfinancialand commercial excellence, TM hasn eve r fo rg o t t e n o u r co r p o ra t eresponsibility nor our role in nationbuilding–andcontinuetomakeheadwayinourpathtolongtermsustainability.

Wehopewhatthisallhasprovenisthatthe trust that you,ourstakeholders,have placed in TM throughout theseyears,have indeedbeenwell founded.“TRUSTUS”isthethemechosenforour2012AnnualReport–inappreciationofthesametrustyouhavegivenus,andasymbolofourcommitmenttoyou.

TM DELIVERS STRONGEST PERFORMANCE SINCE DEMERGERIn2012,TMrecordedanimpressive9.2%riseinGrouprevenuetoRM9.99billionfromRM9.15billionrecordedlastyear,outstripping industrygrowthand thestrongestperformancetodatesincethedemerger in 2008. The improvedperformance was mainly driven byhealthygrowthacrossallkeyproducts– InternetandmultimediaparticularlyUniFi,dataandotherservices.

GROUPChieFeXeCUTiVeOFFiCeR’SDato’ sri Zamzamzairani Mohd isaGroup Chief Executive Officer

STaTeMenT

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EBITDA for FY2012 stood at RM3.23bil l ion, which is higher by 4.7%compared to FY2011 on the back ofhigheroperatingrevenue.NormalisedEBITDAmarginwas32.0%inlinewithHeadlineKPIs.

PATAMIgrewby6.1%toRM1.26billionascomparedtoRM1.19billionrecordedlastyearalsodue tohigherrevenue,togetherwiththerecognitionofdeferredtax incomeandunrealisedforexgain.NormalisedPATAMI,excludingmainlythegainondeferred tax incomeandunrealisedforexgain,stoodatRM881.0million,an increaseof38.8%againstRM634.8 million in 2011. This wasattributedtohigherrevenueandlowertaxexpense.

ThesolidyearperformancehasmeantthatTMhasmadesignificantprogressonourcomprehensiveactionplan topositionourselvesforournextstageofg ro w t h a n d p ro f i t a b i l i t y. T h i sachievementis indicativeofthestrongmomentumwehaveestablishedandcontinuetomakeintheexecutionofoursustainablegrowthstrategy.

We concluded the 2nd phase of ourPerformanceImprovementProgramme(PIP)2.0,andarehappytoreportthatwe have been successful in i tsimplementation. The results andachievementsrecordedover the lastthree years, speak for themselves.Withinthattime,westrengthenedourpositioninthemarket,asyourtrustedbroadbandchampion,andasatrustedpartnerintelecommunicationsservicesnot justacross thedomesticsectors,butalsoregionally.Wearewellonour

waytowardsourgoalofbecominganInformationExchange,asweenvisionit.Asnewmarketsgrowandarecreated,suchastheInternetofEverything, it’sincreasinglyclearthattheInformationExchangeisatthecentreofthatfuture.Nowwell intoournewfiscalyear,wehave introduced PIP 3.0 in the lastquarterof2012,whereyouwillseeaveryfocused,moreagileandaggressivec o m p a n y t h a t i s f o c u s e d o ntransformation,executionandcustomerexperience; helping our customerseffectivelyuseourend-to-endproductofferings and business solutions totransformtheirlivesandbusinesses.

TMisalsopleasedtoannouncethatwehaveachievedallthreeKPIssetforTMin 2012. This t ime last year, weannouncedtothemarketourtargetofrevenue growth of 5%, NormalisedEBITDAmarginof32%andcustomersatisfaction measure based on thecustomer sat is fact ion measure(TRI*M index score) of 72. With thecontinuedemphasison improvingthequalityofcustomerexperienceaswellas its products and services, TMachievedaTRI*Mindexscoreofmorethan72.0;whichiswellabovetheglobaltelcoaveragescoreof68.0.

W e a l s o r e c o r d e d c o n t i n u e dimprovement in capital expenditure(capex) efficiency, with total capexspend/revenue ratio improving from28.0% for FY2011 to 25.5% in 2012despiteincreasedrequirementsarisingfromcustomerprojectsaswellasfortheHSBBproject.TotalcapexspendforFY2012wasRM2.55billion,which islowerintotalagainstFY2011.

InlinewithourcontinuedfocusonTMvalue creation through continuousimprovementonshareholderreturnsandcapitalmanagement,theBoardofDirectors has recommended a finaldividendpayoutof12.2senpershareofapproximatelyRM436.4million,ontopof the interimdividendof9.8senpershareamounting toRM350.6millionpaid in September 2012. The totaldividendpayoutamountsto22.0senpershare, or RM787.0 mil l ion. Thecombinationofourhighlycommittedemployees, extensive brand reach,valued partners and vendors andbalancesheetstrengthhasputusinanexcellent position to capture thesignif icant growth opportunit iesavailable from our markets and togenerate sustainable value for ourshareholders.Thepayoutof the finaldividend,subjecttotheapprovaloftheshareholdersisexpectedtobemadeinJune2013.

YOUR BROADBAND CHAMPIONTMcontinuedtomaintainourleadershippositionintheBroadbandmarketspace.Ourcustomerbasegrewbyabout7.4%,from1.92millionin2011to2.07millionin2012.IntermsofUniFisubscriptiongrowth,wecontinuedwhereweleftoffin2011,wheredemandremainedstrongandshowednosignofslowingdown;such that weclosed 2012 with morethan 482,000 customers, a 104.0%improvement against FY2011. With1.377millionpremisespassedonthebackof96exchanges,thistranslatestoatakeuprateofmorethan35.0%,goingbeyondglobalbenchmarksofsimilarserviceroll-outs.Earlier in2013,we

Group Chief Executive Officer’s Statement

14




achievedanothermilestoneforUniFi,whentheservicesurpassedthehalfamillioncustomermark.Todate,TMhasactivated more than 520,000 UniFicustomersandwearecontinuingthemomentum into 2013. We remaincommittedtoourmissionasthetrustedbroadband provider for the nation,evidenced by our strong combinedcustomer base of both StreamyxandUniFi.

TMremainscommittedasMalaysia’sBroadband Champion to bring anenhancedandintegrateddigitallifestyleto Malaysian homes and businessesthrough our full and comprehensivesuiteofbroadbandservices.Further,weareresponsible toassureMalaysiansthat the brand TM itself and allour products stand for trust, qualityandservice.

HSBBcanbedeliveredtoMalaysiansatservice speeds of 4Mbps and aboveutilisingamyriadoftechnology-neutralwaystosuitallbudgetsandsegmentsofourcustomers.Inournextphaseofbroadbandgrowth,TMwillcontinuetodeliver HSBB via both UniFi andStreamyx, in termsof infrastructureand services, both of which areundergoingcontinuous improvementsin our efforts to deliver the desiredcustomerexperience.

InoursuiteofHSBBservices, in2012we added BIZ30 and BIZ50 Mbpspackages forourSMEcustomerssothatnowUniFideliversspeedsof5,10,20,30and50Mbpswhilstthisyear,werecentlyintroducedan8MbpsStreamyxpackage in addition to the existing4Mbps.Ofcourse,Streamyxcontinues

toofferour lowerspeedpackagesaswell. There are many more excitingproductandservicesdevelopments intheplan,whichwill increasinglyprovetobetechnologyneutralwithfocusonthebenefitsofabroadbandlifestyle.

WearecontinuingtobuildaportfolioofcompellingcontentforHyppTV,whichispartoftheUniFitripleplayresidentialpackagesforconsumersand in2012,wehavealsomade itavailableonanoptionalbasisforbusinessesunderourUniFiBIZpackages.HyppTVcontenthasgrown in leaps and bounds and iscurrently the fastestgrowingpayTVservice in the country. When welaunched theservice inMarch2010,HyppTVstartedwithjust22channels–itcurrentlyhasatotalof107channels–consistingof17freechannelswith8radiochannels,47premiumchannels,15Video-On-Demand(VOD)genresand20 interactive channels – with 23ChannelsinHighDefinition(HD).

Given the big demand for Sportsentertainment,amilestonemomentforHyppTVwaswhenwebroketheSportscontent barrier last year, with theintroductionofourdedicatedand livesportschannels,HyppSportsHDandFOXFootballChannel tobringawideselectionofglobalsportsprogrammingto the living rooms of Malaysians.Malaysiansareableforthefirsttime,to v i e w fo u r U E FA C h a m p i o n sLeague and UEFA Europa Leaguematches via HyppSports live in HDsimultaneously, whilst FOX FootballChannel isMalaysia’s firstdedicatedfootballchannel.

Furthertothis,wehavecreated‘valueformoney’packageofferingssuchasourPlatinumPackwherecustomersareabletoview30PremiumchannelsforjustRM30permonth,whichcomestojustRM1perchannelpermonthandthe latestbeing theRubyPack,of10worldclassAsianandChinesechannels.

WithIP-basedtechnology, IPTVallowsmorerichcontentandapplicationstobebroadcastviaourplatform,creatinganInternetwalledgardenenvironment.SuchadvantagegivesopportunitiestoC o n t e n t P ro v i d e r s ( l o c a l a n dinternational) to leverage on ourplatformtopromotetheircontentviaourIPTVservice.

TM has always believed that thep reva i l i n g a n d f u t u re i n d u st r ydevelopmenttrendscontinuetocentreo n c h a n g i n g a n d i n c re a s i n g lysophisticated customer behaviours.Thesecustomerswant toexperiencethe same service regardless of thedevicesortechnologiesservingthem,hence the challenge is for serviceproviders to give them that sameexperienceoveramultitudeofdevicesandtechnologies.Wealsobelieveweareupforthatchallenge.

Beyond thehomeandoffice,TMstillcontinuestoservethenomadicuserviaourextensive20,000TMWiFihotspotsnat ionwide, which are currentlyundergoing a significant upgradingexercise to ensure better qualityandcoverage.

15



TMhasalsokeptitspromisetokeeptheHSSBnetworkopen,offeringourfibrenetworkonawholesalebasistootherserviceproviderswiththesharedgoalonincreasingbroadbandreachforall.Wehavealsocontinuedtoworktogetherwith property developers in smartpartnerships tobringUniFi into theirnewdevelopments.Todate,wehaves i g n e d u p m o re t h a n 2 0 s u c hpartnerships.

Towards ensuring greater reach forMalaysians in the Internet Age, ourinitiativessupportingBroadbandfortheGeneral Population (BBGP) and inbridgingthedigitaldivide,complementsHSBB in our holistic approach inprovidingbroadbandtothenation.

TM strongly supports the nation’saspiration of achieving a broadbandpenetrationof75.0%bytheyear2015.Todate,Malaysiahasalreadyachieved67.0%, inwhichTMcontributesmorethan45.0%of this.To furtherrealisethisgoal,TMworkstogetherwiththeMalays ian Communicat ions andMult imedia Commission (MCMC)throughtheUniversalServiceProvision(USP) Fund to prov ide Internetconnection to local communities byestablishing284Pusat Internet 1Malaysia (PI1M)nationwide,particularly in theunderserved areas. We assist in the1,622 locationsof theKampung Tanpa Wayar,orWirelessVillages.TMhasalsob e e n a c t i v e ly i n v o lv e d i n t h eestablishment of Perpustakaan Jalur Lebar (PJL),aprojectaimedatupgradingcommunity broadband libraries withcomputers, complete with Internetconnection tobeusedcollectivelybylocalcommunities.Currently,thereare98operatingPJLsnationwide.

Inthebiggerpicture,thisformspartofourestablishedapproachtoCorporateResponsibilityandSustainabilityinthefour dimensions of Marketplace,W o r k p l a c e , C o m m u n i t y a n dEnvironment,andour focuspillarsofEducation,Community/Nation-Buildingand Environment. This is covered inmoredetailinourChairman’sStatementaswellasadedicatedchapterlaterinthe Annual Report, and of course,s e p a ra te ly i n o u r s ta n d - a lo n eSustainabilityReport.

CUSTOMER ExPERIENCE – SERVICE WITH HEARTTMhasalwaysbeenacustomer-centricorganisationandstaying true to this,had declared 2012 as the Year ofCustomer Experience. Intensifiedeffortsweremadetoenhancecustomerexperienceateverytouchpointacrossthe different delivery environments,services and interaction channels,whichaimsnotonlytoequipfrontlinestaffwiththehardwareforgoodservice,but also stresses the importance of‘heartware’ tocreateapositiveandlastingimpressiononthecustomers.

IwouldliketotakethisopportunitytothankeachandeveryoneofourTM“Front-liners”–theoneswhointeractwithourcustomers24/7,365daysayear;attheCallCentres(bothatTMandoursubsidiaryVADSBerhad),TMpointoutlets, thetechnicianswhogoouttoinstallandrestoreservices,oursalespeople across the many customersegmentbusinesslineswhotirelesslyman our more than 30,000 groundevents a year, and especially at theStates(wheretherubberhitstheroad),fortheirtirelesseffortstoensurethattheTMcustomerexperiencewillalwaysbeagoodandimprovingone.TheyareourtrueTMAmbassadors.

Customerservice is indeedacriticalfunction for TM. As of last year, theCustomerServiceManagement (CSM)d i v i s i o n i s a l s o u n d e rg o i n g atransformationwhereitsprocesseswillbe strengthened, streamlined andsimplifiedsoitbettersupporttheLinesofBusinesses(LOBs),andultimately,tobetterserveourcustomers.

TMhastwospecificunitsthatlookintothe training of our front-liners, theTechnical Academy as wel l theCustomerServiceAcademy(CSA)whichwas established in August 2011 todevelopTM’shumancapitalcapabilitiesin terms of delivering a SuperiorCustomer Experience, through ourSMILEprogramme.SMILEcomprisesthreesemestersoftrainingandin2012,3,756 participants completed theprogramme,markingan increaseof188.0%from2011.

2012wasalsoagreatyear forTM inSocialMedia,especially inthewayweengageandbuildcloserrelationshipswi th our customers. We f i rmlyestablishedTM’spresenceasawarmvoice that iscredibleandcares, thatlistens to our customers and takesaction.TMhas fullyembracedsocialmediaasaneffectiveplatformforbothexternalandinternalcommunications,withourTwitteraccounts@TMCorpandservice channel @TMConnects, @EveryoneConnectsand@TeamMsia,asw e l l a s F a c e b o o k a c c o u n t sEveryoneConnectsandTeamMalaysia.For instance, in addition to existing“Keeping Customers In formed”c h a n n e l s s u c h a s w e b s i t eannouncements, call centre alerts,TMpointsanddirectmessages;throughSocialMediawecreatedannouncement


16




hashtags to better alert Twitterfollowers on important or criticalnoticesthrough#TMAlerts,#TMNewsand #TMTips. TM also in i t iated#FabFridayTMweeklycontestsvia@TMCorp. #FabFridayTM was so wellreceived; it has appeared as a toptrending topic in Malaysia 16 timessinceitsestablishmentinMay2012.InDecember2012, “TelekomMalaysia”becameoneofthetop10talkedabouttopicsintheworld.

Auniqueinitiativewasalsointroducedin2012tobringouremployeeswhodonotnormallyfacecustomersclosertopeople theyserve.ThisSalam Mesra CustomerEngagementProgrammeranfor10weeksfromOctobertoDecember2012,andsawabout5,000employeesfromheadquartersandnon-salesunitsfromthestatesgo to thegroundandm e e t c u sto m e rs d o o r - to - d o o r.Participationinthisprogrammeprovedtobeanewpositiveexperiencefortheemployees, who obtained greaterinsight into ground operations. Thisprogramme also proved that TM’semployeesareopen toadapting toanewMindsetandWorkCultureChangein linewithanapproach focusingon“thinkingout-of-the-box”and“workingbeyond-our-box”.

This has resulted in the promisingcustomer satisfaction TRI*M indexscoreofmorethan72.0surpassingtheheadlineKPIandglobalaverage.ThisemphasisonCustomerExperiencewillcertainlycontinueinto2013andbeyond.

TEAMING WITH PASSION: THE SPIRIT OF 1TMAttheheartofanyCompany,andevenmoresointhisjourneyoftransformationis thespiritofourpeople. InTM, thisdynamicenergythatisthedrivingforceof change, is called Teaming WithPassion(TWP).

Ofallourachievementsovertheselastthreeyears,andmostimportanttome,itwouldbehowourpeoplehaveraisedtheenergyandspiritofTWP.Wehaveallcome together as 1TM, with a fierypassion towin,grounded inourcoreKRISTAL values and we took onwhateverchallengethatcameourway.

TMemployeesbelievewehaveauniqueprivilegethatwehavearesponsibilitytomakegoodon.EverythingwedoinourdailyjobswillultimatelyhaveanimpacttothedevelopmentofMalaysia,asweplayanimportantroleintransformingt h e w a y M a l a y s i a n c o n n e c t ,communicateandcollaboratetowardsabetterfuture;inthewayswetouchtheirlivesthroughourproductsandservices.

TMhasproventhatwecanchangeandtransform–inthewaythatweworkandinthewayweapproachthemarketandbetterserveourcustomers.Thathastruly been the proudest achievementofall.

In recogni t ion o f the immensecontributionofourpeopleandimpactofthiscontribution to thebusiness,TMhas long placed great emphasis onemployeedevelopmentandtheirwell-being, for which the Company hasearnednumerousaccoladesover theyears.In2012,TMwontheGoldawardfor the Employer of Choice by theMalaysianInstituteofHumanResourceManagement(MIHRM)inrecognitionof

sustainedandcontinuouscommitmenttothedevelopmentofitshumantalent.TM firmly believes in helping ouremployeesrealisetheir fullpotential.This is achieved through a range ofinitiatives,fromstructuredlearninganddevelopmentprogrammestocohesiveleadership and career development,systematic coaching and personalenrichmentopportunities.

The leadership teamatTMalso takeemployeeengagementveryseriously,andgladlydevotequalitytimetoensuregroup messages and directions arecascadeddowneffectivelyandregularly,formally and informally, throughtownhalls, teh tarik sessions, deepdives,andsoon;encouraginganopendialogueforemployeefeedbackatthesametime.

Asaresult,our2012My1TMSurveyoremployeeengagementindexrecordedascoreof90.0%,whichis13percentagepointshigherthantheMalaysiannorm,a significant 15 percentage pointshigherthantheGlobalTelco(GT)normandfivepercentagepointsbetterthanGlobal High Performing Companies(GHPC)norm.

Reaching out to the next potentialgeneration of TM, we organised ourinauguralCareer&EducationFairalsoin2012. It receivedanoverwhelmingresponsefrom18,726attendees,84.0%ofwhomwerebelowtheageof28.Thisstrengthened TM’s position as thepreferredemployeramongtheyouth,and contr ibuted to TM winningMalaysia’s 100 Leading GraduateEmployers intheTelecommunicationsSectorforthefirsttime.Thisbodeswellfor future TM leaders to take thecompanyonwardsandupwards.

17



PIP 3.0: THREE MAIN PILLARS OF PRIORITY MOVING FORWARDTMfirst launchedPIP1.0 in2006, toenhance operational efficiencies inaddressingtheserioustwinchallengesoffastdecliningvoicerevenueandslowbroadbandrevenuegrowth.FollowingthestreamliningofTM’scorebusiness,these guidelines were remodeled tofurther tighten operations, enhancecustomer service, improve internalcapabilities and produce healthierprofits.Bythetimeofthedemergerin2008,TMhadmanagedtoarrest thisdecline,andstartedtoturntheCompanyaroundtowardsgrowthagain.

Next, itwasimportanttomaintainthismomentum,andatthesametimebuilda strong foundation for the futuregrowthoftheCompany.TheresultwasPIP2.0, introduced inNovember2008whichfocusedonfourstrategicthrusts- Customer centricity and qualityimprovements;Operationalexcellenceandcapitalproductivity;Onecompanymindsetwithexecutionorientation;andLeadership through commercialexcellenceor“COOL”.

On the operational aspect, PIP 2.0continuedto tightenTM’soperations,enhance customer service, improveinternal capabilities and produce ahealthierbottomline.Fastforward,thePIPshaveseenencouragingresults inmitigatingthedeclineinthefixedlinebusinesswhereTMmanagedtoarrestthe decline in 2009, followed by amodest growth of 2.1% in GroupRevenue in2010, then4.1%lastyear,followedbythecommendablerevenuegrowthof9.2%thisyear.

TM’songoing transformation journeystandsingoodsteadandwillallowtheGroup to maintain the momentumof growth that has already beenestablished.

Someoftheachievementsduringthistimehavebeenhistoricmilestones.TMnot only completed the roll out theHSBBnetworkandservices in time,within cost and with the workforcemotivated and intact; it is globallyrecognisedasoneof the fastestandmostcosteffective,giventhewidescopeof thisambitiousendeavour.TMandMalaysiahavealsoachievedthehighesttake-up rate to date by regionalcomparison. Moving forward, inachieving the aspiration towardsbecominganInformationExchangeandcateringtotheever-changingbusinessdynamics, TM has recently kickedoff PIP 3.0 that will focus on threemainareas:

• Continued Growth -continue tofocus on TM’s core business ofvoiceandbroadbandwhilstatthesametimemaximisingtheusageofournetworkandexploitingnewgrowthopportunities.

• Fundamental Productivity Shift-sustaining profits by increasingproductivity,adoptingbestpracticecost and capital efficiencies.Towards this end, operationalexce l le n ce w i l l b e f u r t h e rimproved, focusing on four keyareas; namely the streamliningandoptimisationof thenetwork,processes, procurement andpeople.

• Improve Institutional Health Drivers -acceleratetransformationoftheCompany intoacustomer-centricorganisationbyinculcatingthevalueof“TotalCommitmenttoCustomers”intoeveryleveloftheorganisation. Internally,TMhasalso adopted a new marketapproachtofurtherincreasefocusonourkeycustomersegments.

ExecutionofthePIP3.0willbeafocalpoint forTM in2013.TheCompany’sfocusfor2013willstillbetomaintainitsposition as Malaysia’s BroadbandChampionanchoringonStreamyxandUniFias itskeybroadbandproducts,deliveringanenhancedandintegrateddigitallifestyletoallMalaysians.

Competitionisexpectedto intensify inthe retail space, but it also createsopportunitiesforTM,alignedwiththeInformation Exchange aspiration, aconceptwhichweintroducedlastyear.Torecap,itisenvisionedthatwheneverthereisaflowofinformationfromoneuser to another, regardless of whatdevicetheyuse,anytime,anywhere,wewantthat informationtotouchTM,nomatterwhosecustomerstheyare.




18

TelekomMalaysiaBerhadAnnual Report 2012


signed its first telepresence globalcollaborativeagreement,withAT&T.TheAT&TBusinessExchangedirectlysupportstelepresenceinmorethan130companies and organisations. VADSmanaged contact centres comprisemorethan5,000contactcentreseatsacross13deliverycentres inMalaysiaandIndonesia.

Thus,webelievethatTMoffersthemostholistic and seamless end-to-endsolutionsinthemarket,cuttingacrossconnect iv i ty , ICT infrastructure(includingCloudServices),Value-AddedServices (VAS)andBPOServices.TMbringstogetherpeople,processesandtechnologiestoenablemoreeffectiveand dynamic use of informationtechnology and communication. Ouraim is to empower businesses withvalue-based innovative solutionsand services by offering expertiseso thatcustomerscan focuson theircorebusiness.

Against thisbackdrop, theCompany’seffortswillcontinuetobe focusedoncreatingvalueforitsstakeholders.TMhasannounced itsHeadlineKPIs for2013consistingof revenuegrowthof6%;EBITGrowthof3%;andcustomersatisfactionmeasureof72.This is inlinewiththestableeconomicoutlookasforecast by Malaysian Institute ofEconomicResearch(MIER)of5.0-6.0%rangeforthenexttwoyears.However,withdueregardtotheglobaleconomicuncertainty, industry liberalisation,regulatory changes and intenselycompet i t i ve te lecommunicat ionlandscape, we expect TM’s growthprospectstoremainpositive.

ACKNOWLEDGEMENTSWhatayearithasbeen.TMwouldnotbe where we are today without theformidablesupportofourstakeholders.Ourgratitudeandutmostappreciationgoes out to first and foremost, ourcustomersandshareholders, for thetrustyouhavebestowedonus,andtowhom we commit to del iver ingcontinuousvalue.

ToourBoardofDirectors,ourChairman,themanagementofTMandallWargaTM – thank you for your leadership,guidance and support, hard work,energy,dedicationandthestrongbeliefinourbrightsharedfuturetogether.

TM is in thebusinessofconnecting,communicatingandcollaborating–andour various business partners, oursuppliersandmediafriends,ourfellowindustryplayers,havealsoliveduptothat mantra with us in serving ourcustomers,forwhichwearegrateful.

To the Government of Malaysia, ourMinistryandregulators;ourhighestappreciation – TM was entrusted todeliveranation-transformingprojectinHSBBfouryearsago.Weareveryproudto have indeed delivered this forMalaysiaand forallMalaysians,buttrulyTMwasallthemorefortunateforit;asithasmeantthestartofourownfundamentaltransformation–andone,thatishopedwillonlytakeustogreaterheights,intheserviceofMalaysia.

Dato’ Sri Zamzamzairani Mohd IsaGroup Chief Executive Officer

Insupportofthis,TM’sdomesticreachisalreadythemostextensivebutsoisour international reach, owning orleasing capacity on more than 10submarine cable systems spanningmore than 60,000 fibre-route milesaroundtheglobe.Duringtheyear,thesecondphaseofitsprivateinternationalsubmarine cable system CahayaMalays ia (ASE) was completed,connecting Malaysia and Japan toTseungKwanOlandingstationinHongKong.ThiswillbereadyforservicebyMarch2013.ThefirstphaseofCahayaMalaysiaconnectingMalaysiatoJapanhasbeencarryingInternettrafficsince20August2012.CahayaMalaysiawillformthebackbone linkingTM’s firstdata centre in Hong Kong, the VADSDataCentre,toMalaysiaandJapan.

VADStogetherwithTMEnterpriseandTM Government, is poised to takeleadership in theManagedAccountsand InformationandCommunicationTechnology(ICT)andBusinessProcessOutsourcing(BPO)segment.VADShas15 Data Centres, 14 located acrossMalaysiaandoneinHongKong.Thesecentres are highly secure, with ISO27001-certified infrastructure,andareT ier I I I -ready wi th mult ig igabi tconnectivity.In2012,itbecamethefirstMalaysia-basedICTcompanytoachievethe Cisco Managed Services MasterChannel Partner certification afterpassing a stringent technical andoperational audit. The certificationenables VADS to offer Cisco-basedmanagedservicesglobally.VADSalso

19



REVIEW OF 2012Malaysia has a vision to achieve developed nation status by2020, and one of the main pillars of a developed nation isadvanced telecommunications services. Today, Malaysiahasatechnologicallyprogressiveeconomy,withwidespreadadoptionofmoderntechnologies inalmostallsectors1.TheMalaysianInstituteofEconomicResearch(MIER)hadreportedMalaysia’s2012GDPgrowthtobe5.1%,howeverBankNegaraMalaysia subsequently announced a better-than-expectedGDPgrowthof5.6%,fuelledbystrongdomesticdemand2.

2012 saw the completion of Phase 1 of the High SpeedBroadband(HSBB)networkprojectlaunchedinMarch2010.ThisPublicPrivatePartnership(PPP)betweentheGovernmentand TM achieved the targeted network infrastructure roll-out and premises passed covering inner Klang Valley andkey economic and industrial zones throughout the country,includingtheIskandarMalaysiaregion.AsatendDecember

2012,TMhaddeployedHSBB infrastructureat97exchangeareas achieving 1.377 million premises passed, surpassingthetargetof1.335millionpremises3.

The take-up of UniFi continued to be strong, exceeding484,000subscribersasatend2012ascomparedto236,000at the end of 20113. The Fibre-to-the-Home (FTTH) CouncilAsiaPacifichadin2011declaredMalaysiatohavethehighestFTTHtake-upinSoutheastAsia,whileBTTelConsult,aUK-based Telco consulting firm, acknowledged the country ashaving the third fastest HSBB roll-out in the world. IDC, aglobal market intelligence firm, estimates that there were18.7 million Internet users in Malaysia in 2012, translatingintoroughly65.0%of thepopulationhaving Internetaccess.Fixed broadband attributed to 46.4% of the total broadbandsubscription.WebelieveInternetadoptionhasbeengrowingfaster than ever before mainly due to competitive pricingandastableeconomyresultinginahigherdisposableincomeformany4.

The TeLeCOMMUniCaTiOnSSeCTOR: ReVieW & OUTLOOKfaCts at a GlaNCE

Householdbroadbandpenetrationratein2012

66.0 %

FTTH/FTTBsubscribers–highestinSoutheastAsia*

510,000

HSBBpremisespassedin2012

1.377 million

20




In 2012, MCMC had reported a 66.0% household broadbandpenetration rate5, with all telcos racing to achieve a 75.0%broadband household penetration rate by 2015 as targetedbytheGovernment.MalaysiahasthesecondhighestInternetpenetrationinSoutheastAsia(SEA)in2012,afterSingapore6,in part attributed to the Government’s National BroadbandInitiatives(NBIs)andDigitalMalaysiaprogrammes.

The year ended with an interesting development on theregulatory front when the MCMC allocated the 2600MHzspectrumband toeightcompanies forLongTermEvolution(LTE)services7.Thisisapositivemoveforthecountry,asnowMalaysianscanenjoyhighspeedbroadbandevenwhenonthego.WebelieveLTEwill complementTM’sUniFiservice, thesamewaythat3GhadcomplementedTM’sStreamyxserviceyearsago.

2013 OUTLOOKThe global economy is expected to gradually strengthen in2013, as factors underlying the current soft global marketactivity subside8. According to the International MonetaryFund (IMF),globalGDPgrowth isexpected toreach3.5% in2013from3.2%in2012.

GlOBal GDP GROWtH(Percent, quarter over quarter, annualised)

Q413

World

Advanced Economies

Source: IMF staff estimates.

Emerging and Developing Economies

-1

0

1

2

3

4

5

6

7

8

-2

122011

Source:IMFstaffestimates

On the local front, MIER has revised upwards its GDPgrowth forecast from 5.4% to 5.6%1, backed by resilientdomestic demand. This supports a positive Malaysiantelecommunications industry outlook driven by theInternet/data segment9. IDC forecasts that the Malaysiantelecommunications industry will continue to maintain astablecompoundannualgrowthrate(CAGR)ofapproximately4.8%from2012-201510.

Webelievetheindustrywillcontinuetoseegoodhigh-speedbroadband take-up rates to homes and offices. The roll-outof4GLTEservices isalsoexpectedtoprovideastimulus tothesector.Withinthebroadbandspace,weexpectourtake-upratetoremainstrong,supportedbycontinuedgrowthinUniFiand the launch of 8Mbps Streamyx for both the Consumerand SME market segments in early January 2013, enablingsubscribers to enjoy high speed broadband beyond UniFicoverageareas.

TMwillcontinuetoshowthevalueofhighspeedbroadbandby bringing more content and applications to the market.Competition is also expected to intensify with the likelyconvergence of the telco-multimedia industries as moreplayers move into the Internet Protocol television (IPTV)space9. According to the Multimedia Research Group Inc,the number of global IPTV subscribers is expected toreach 83 million at end 2013, tripling from 28 million in200911. We are confident, however, that our own HyppTVwillremaincompetitiveaswecontinuetoaddto itscurrent114 channels including 10 sports channels. Most recentlywe have introduced LIVE football matches from the UEFAChampionsLeague,UEFAEuropaLeague,SpanishLigaBBVAandthebestofAmericansportingactionfromtheAllSportsNetwork(ASN).

On the traditional voice front, Gartner Inc., an informationtechnology research company, foresees increasingly moredomestic and international voice traffic moving from fixedconnectionstoover-the-top(OTT)serviceproviders,suchasSkype.However,Gartnerbelieves thatmostconsumerswillstillretaintheirfixedlinesforitsvoicequality.PSTNlinesarelow cost and usually packaged as double play service withbroadbandorasa tripleplayservicewhenvideo isadded12,or when packaged to enable other digital home lifestyleapplications such as home security, interactive games andotherservices.

21



The Telecommunications Sector:Review & Outlook

AccordingtoIDC,theICTmarketoutlookin2013isexpectedto be upbeat with ICT spend growing 7.6% from over RM9billionin2012tocrosstheRM10billionmark13.Thisisfurtherencouragedby the launchofDigitalMalaysia in2011by theMinistry of Science, Technology and Innovation (MOSTI) andthe Multimedia Development Corporation (MDeC). Thisnew national programme aims to create an ecosystem thatpromotesICTinallaspectsoftheeconomyinordertoboostourGrossNationalIncome,enhanceproductivityandimproveour standard of living14. Cloud services, however, have yetto fully takeoff, due to lack of familiarisation of the serviceamonglocalbusinesses.Morepositively,webelieveastrong

signalfromtheGovernmentcouldcreatetherightmomentumforcloudadoption13.

In conclusion, we believe we will continue to see healthycompetition among multiple service providers in 2013.Businesswillbeincreasinglychallengingduetothegrowingpopularity of OTT service providers such as Google, Skype,YouTubeandAppleTVforcommunicationaswellascontent.Weareawareofthesechallengesandhaveputplansinplacetocontinuetodelivervaluetoourcustomers.TMmaintainsitsvisionofbecominganInformationExchangewiththeobjectiveoftransformingTMtobeaconnectivity,ICTandcontenthubfortheregion.

MalaYsia iNtERNEt UsERs BY sEGMENt (2011 – 2016) (‘000)

2011 2012 2013 2014 2015 2016

PersonalSMBLarge BusinessGovernmentEducation

CAGR 8.4%

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

1,605.4

7,224.1

1,143.81,765.9

8,421.1

1,871.4

17,821.3 19,736.8 20,975.9 22,175.1 22,873.0

2,401.8

10,808.1

1,711.3

2,642.0

2,328.5

10,478.4

1,659.1

2,561.4

2,202.6

9,911.7

1,569.42,422.9

2,072.5

9,326.2

1,476.72,279.7

1,333.32,058.5

15,288.2

Category 2011 2012 2013 2014 2015 2016 2011-2016CaGR (%)

Personal 15,288.2 17,821.3 19,736.8 20,975.9 22,175.1 22,873.0 8.4

SMB 1,605.4 1,871.4 2,072.5 2,202.6 2,328.5 2,401.8 8.4

LargeBusiness 7,224.1 8,421.1 9,326.2 9,911.7 10,478.4 10,808.1 8.4

Government 1,143.8 1,333.3 1,476.7 1,569.4 1,659.1 1,711.3 8.4

Education 1,765.9 2,058.5 2,279.7 2,422.9 2,561.4 2,642.0 8.4

Total 27,027.3 31,505.5 34,891.9 37,082.4 39,202.5 40,436.2 8.4

Source: Malaysia Internet and eCommerce 2012-2016, Forecast and Analysis, Dec 2012, IDC

MalaysiaInternetUsersbySegment,2011-2016(‘000)

22




Sources:1) Malaysia – Telecoms, Mobile, Broadband and Forecasts,

MarketResearch.com, 7 Aug 2012, Paul Budde Communication Pty Ltd

2) Malaysian Economic Outlook, 18 Jan 2013, MIER; Economic and Financial Developments in Malaysia in the Fourth Quarter of 2012, Bank Negara Malaysia, 20 Feb 2013

3) Performance, Planning and Programme Management, Group Strategy, TM

4) Malaysia Internet and eCommerce 2012-2016, Forecast and Analysis, Dec 2012 , Akmal Ab Wahab, IDC

5) Official Portal of SKMM, http://www.skmm.gov.my6) Malaysia Social Media Market: A Competitive Study, Nov 2012,

Audrey Heng, Hweexian Tan, IDC7) Eight Companies Get Spectrum for Malaysia’s 4G Mobile Broadband,

5 Dec 2012, The Star Online

MalaYsia, HOUsEHOlD BROaDBaND sUBsCRiBERs & PENEtRatiON RatE (2007 - 2012)

Household Broadband Subscribers Number of Households Household Penetration Rate (%)

20082007 2009 2010 2011 20120

700

1,400

2,100

2,800

3,500

4,200

4,900

5,600

6,300

7,000

(’000) (%)6,676 6,7446,605

6,219

1,285

1,972

3,672

4,2704,658

6,091

927

15.221.1

31.7

55.6

62.366.06,000

Category 2007 2008 2009 2010 2011 2012

HouseholdBroadbandSubscribers(‘000) 927 1,285 1,972 3,672 4,270 4,658

NumberofHouseholds(‘000) 6,000 6,091 6,219 6,605 6,676 6,744

HouseholdPenetrationRate(%) 15.2 21.1 31.7 55.6 62.3 66.0

8) World Economic Outlook, International Monetary Fund, 23 Jan 2013

9) Intense Competition Likely Among Telcos But Outlook Still Rosy, 5 Jan 2013, Leong Hung Yee, The Star Online

10) IDC Tracker, H1 201211) TM vs Astro: Moving in for the Eyeballs, 12-18 Jan 2013, Focus

Malaysia12) Forecast Analysis for the Malaysian Market (via email),

17 Jan 2013, Neha Gupta Gartner13) Malaysia ICT Spending to Cross RM10 billion in 2013,

6 Dec 2012, Business Times14) Digital Malaysia Initiative to Boost GNI by RM294 billion by 2020,

5 July 2012, Gabey Goh, The Star Online15) TM Internal Analysis

* FTTH Council Asia Pacific

23



TM’sjourneybeganwhenitwasestablishedastheMalayanTelecommunicationsDepartmentin1946.Post-independence,itwascalledtheTelecommunicationsDepartment,FederationofMalayaandthenrenamedasJabatanTalikomMalaysia(JTM)in1964.Itsjourneyhasmirroredthatofthecountry,andwhentheGovernmentlaunchedapolicytocorporatisekeypublicservices,JTMwasoneofthefirsttobeprivatised.Thistookplacein1987,followingwhichJTMbecameSyarikatTelekomMalaysiaBerhad.In1990,itwaslistedontheMainBoardofBursaMalaysiaunderitscurrentname,TelekomMalaysiaBerhad(TM).

TMhasliterallybuiltthecountry’stelecommunicationsandbroadcastinginfrastructure.Itwasinstrumentalinsettingupthenation’sfirstmobilenetwork,theATUR450,in1985andlaterthefirstGSMnetworkin1995.By2003,itwasthelargestintegratedtelcoinMalaysiawithbothfixedandmobileoperations.

By2008,TMhadbecomearegionaltelcopowerhousewithapresenceinnineAsiancountriesotherthanMalaysia,namelySriLanka,Bangladesh,Indonesia,Cambodia,Pakistan,India,Iran,SingaporeandThailand.Givenitssize,theBoardofDirectorsapprovedaplantodemergeTM’sfixedandmobilebusinessesforbetterfocus.Withthedemerger,completedinApril2008,twoleadingtelecommunicationscompanieswerecreated–Axiata,theregionalmobilechampion;andTM,thedomesticbroadbandchampion.

STRaTeGiC JOURney

‘82: Govt policy on corporatisation

’84-’86: Legislative & Administrative action

1946

1957

1964

1987

1990

2005Nov ‘90: Listed on Bursa Malaysia

Apr ‘05: Re-branding of TM

Malayan Telecommunications Department

Telecommunications Department, Federation of Malaya

Jabatan Talikom Malaysia

Syarikat Telekom Malaysia Berhad

Telekom Malaysia Berhad


2008


Jan ‘87: Corporatisation of Jabatan Talikom Malaysia

Apr ‘08: De-merger of fixed and mobile

GOVERNMENT DIVISION PRIVATISATION DEMERGER

Figure 1: TM’s evolution from a Government department to a public-listed GLC today

24




TM’S STRATEGIC JOURNEYTMcontinuedtoforgeaheadwithrenewedenergytogrowthedomesticfixedbusiness.Withaclearvisionforthefuture,athree-phaseStrategicPlanwascrafted.

Strengthen position in domestic market

and broadband

Expand business focus to include ICT, BPO and New Media

CSDP: My1Content

Growth, Efficiencyand Productivity

BROADBANDCHAMPION

INFORMATIONEXCHANGE

INSTITUTION BUILDING TOWARDS GROWTH, EFFICIENCY AND PRODUCTIVITY

1

2

3

TM’s Strategic Journey

2008

2011

2015

De-merger

Data Center (DC) & Disaster Recovery (DR) services

CloudComputing

Figure 2: TM’s Strategic Plan

PHASE 1: BROADBAND CHAMPIONThefirstphaseofTM’stransformationinvolvedstrengtheningitsleadershipinthebroadbandspace.Thiswasaccompaniedby restructuring the organisation into six customer-facing segments – Consumers, SMEs, Enterprise, Government,WholesaleandtheGlobalmarket–inordertoestablishbetterfocuswithasinglepointofcontactwhenservingcustomers.

InSeptember2008,TMenteredintoaPublicPrivatePartnershipwiththeMalaysianGovernmenttobuildanddeliverthenation’sfirsthighspeedbroadband(HSBB)network.Centraltothiswasmigrationofthecorenetworktoanall-IPplatform.ThenewCoreNetwork,knownastheNext-Generation-Network(NGN)wascompletedin2010formingthebasicbuildingblocksfortheHSBBsuperhighwayconnectingallofMalaysia.

Atthesametime,TMstartedbuildingtheHSBBaccessnetworknationwide.On24March2010,UniFi,thenation’sfirstHSBBservice,waslaunched.Bytheendof2012,TMhaddeployedtheHSBBnetworkto1.377millionpremises,onscheduleandbelowbudget.

TheHSBBProjectisanacknowledgedsuccess,withtheFTTHCouncilAsiaPacificcitingMalaysiaashavingthehighesttake-upofhighspeedbroadbandserviceinSoutheastAsiaandBTTelconsult,aUK-basedtelcoconsultingfirm,creditingtheHSBBnetworkroll-outasoneofthefastestandlowestcostintheworld.

25



Strategic Journey

PHASE 2: INFORMATION ExCHANGEHavinglaidthefoundationfortheNGN,TMcontinuedtoexpanditsbusinessintoInformationandCommunicationsTechnologies(ICT),BusinessProcessOutsourcing(BPO)andNew/DigitalMedia,inlinewithitsvisiontotransformintoMalaysia’s‘InformationExchange’.Bythis,TMintendstobethepreferredtelcopartnerforalltypesoftraffic–fromvoiceanddatatomultimediaandvideo.TMenvisagesbecomingthemeetingplaceofchoiceforpeopletoconnect,communicateandcollaboratebeitforpersonalcommunication,business,educationorentertainment.

TMfurtherexpandedintothecontentspacewiththelaunchofHyppTV,itsownbrandofIPTVservice.ThismarkedTM’sabilitytoaggregatecontentfromvariouscontentprovidersandseamlesslychannelthemtoendcustomersviaitsNGN.HyppTVtodayhas107channelsincluding12sportschannelsfeaturinglivefootballmatchesfromtheUEFAChampionsLeague,UEFAEuropaLeague,SpanishLigaBBVAandthebestofAmericansportingactionfromtheAllSportsNetwork(ASN).

Inaddition,TM launchedMy1Contenton13June2012, the first integratedDigitalMarketplace forcontentbuyersandsellerstomeetanddobusiness.ThiswasbuiltontheContentServiceDeliveryPlatform(CSDP)developedinpartnershipwiththeMalaysianGovernment,inthespiritofbuildingandpromotingthelocalcontentindustry.

TMhasinvestedbyeitherbuildingorleasingcapacityinmorethan10submarinecablesystems,whichspanabout60,000fibre-routemilesaroundtheglobe.TM’sfirstprivateinternationalcablesystem,CahayaMalaysia,wasfullyoperationalinFebruary2013connectingMalaysiawithHongKongandJapan.AcablelandingstationinHongKongformsthekeylinkinconnectingTM’sowndatacentreinHongKong(VADSHKDC)withMalaysiaandtherestoftheworld.TM’sdatacentreinHongKongwasalsoinstrumentalinstrengtheningTM’sICTfootprintoutsideMalaysia.

TMhasalsoenteredintoseveralstrategiccollaborationstoimproveitscontentdeliveryservice,thusattractingmoretrafficontoitsnetwork.InNovember2011,itestablishedapartnershipwithAkamai,aleadingCloudPlatformProviderintheUS,fortheAkamaiNetStoragefacilityinSouthAsiatobehostedinTM’sdatacentreinCyberjaya.ThisimprovedtheInternetsurfingexperienceofcustomersinAsiawhilekeepingtrafficcontainedwithintheregion.

Tomaintainitspositionasthepreferredconnectivitypartner,TMwillintroducetheMy1Hubservicebythefirstquarterof2013.Thiswillofferanend-to-endsolutioncoveringboththedomesticandinternationalportionofitspartners’connectivity requirements. My1Hub will be neutral, leveraging on TM’s connectivity and ICT infrastructure, whichincludesitsdatacentre,datarecoveryandasuiteofmanagedservices.

PHASE 3: INSTITUTION BUILDING TOWARDS GROWTH, EFFICIENCY AND PRODUCTIVITYMoving forward,TMwill focusoncontinuedgrowthand institutionbuilding towardsefficiencyandproductivity.AsMalaysia’sleadingnewgenerationcommunicationsprovider,TMaspirestobethecountry’scatalystofgrowth.Keytoitssuccessissupportfromstakeholders,namelyitsemployees,theGovernmentandregulators,industryleadersaswellasbusinesspartnersandcustomers.Embracingthespiritof1Malaysia,TMseekscooperationfromindustryleaderstobuildastrongereconomiclandscapeforthecountry.Together,TMbelievesthatwecanpropelMalaysiatowardsbecomingahigh-income,developednationby2020.

26




Group Financial Highlights

In RM Million 2008 2009 2010 2011* 2012

OPERATING RESULTS#

1. Operatingrevenue 8,653.7 8,608.0 8,791.0 9,150.7 9,993.52. Profitbeforetaxationandzakat 332.6 921.6 1,360.2 1,001.2 1,069.63. Profitforthefinancialyear

–Continuingoperations 260.5 673.3 1,245.0 1,237.1 1,305.9–Discontinuedoperations 624.9 – – – –

4. ProfitattributabletoequityholdersoftheCompany–Continuingoperations 213.6 643.0 1,206.5 1,191.0 1,263.7–Discontinuedoperations 562.6 – – – –

KEY DATA OF FINANCIAL POSITION#

1. Totalshareholders’equity 10,204.8 6,946.1 7,659.7 7,424.0 6,894.82. Totalassets 22,881.1 20,237.4 21,079.0 22,252.3 22,195.93. Totalborrowings 7,000.0 6,713.5 5,532.0 6,410.4 7,140.4

SHARE INFORMATION#

1. PershareEarnings(basic) 22.5sen 18.3sen 33.9sen 33.3sen 35.3 senGrossdividend 26.3sen 23.0sen 26.1sen 19.6sen 22.0 senNetassets 295.3sen 196.0sen 214.7sen 207.5sen 192.7 sen

2. SharepriceinformationHigh RM3.70 RM4.00 RM3.60 RM5.09 RM6.40Low RM2.54 RM2.60 RM3.04 RM3.50 RM4.71

FINANCIAL RATIOS#

1. Returnonshareholders’equity 5.2% 7.5% 16.5% 15.8% 17.7%2. Returnontotalassets 3.9% 3.3% 5.9% 5.6% 5.9%3. Debtequityratio 0.7 1.0 0.7 0.9 1.04. Dividendcover 0.9 0.8 1.3 1.7 1.6

* RestatedduetoimpactoftransitiontoMalaysianFinancialReportingStandards(MFRS).

# Comparativefigureswererestatedduetoimpactofotherchangestocomparativesasdisclosedinnote50tothefinancialstatements.

27



Group Financial Highlights

6.1% to

RM1,263.7

9.2%revenue growth, surpassing industry growth

RecordedOperating Revenue

12’11’10’09’08’

Profit Attributable to Equity Holders of the CompanyRM Million

RM Million

%

RM Million

RM Million

RM Million %

Total Assets

Return on Total Assets

Return on Shareholders’ Equity

Total Shareholders’ Equity

Total Borrowings

Debt Equity Ratio

12’11’10’09’08’

12’11’10’09’08’ 12’11’10’09’08’

12’11’10’09’08’ 12’11’10’09’08’

12’11’10’09’08’ 12’11’10’09’08’

8,65

3.7

8,60

8.0

8,79

1.0

9,15

0.7

9,99

3.5

22,8

81.1

20,2

37.4

21,0

79.0

22,2

52.3

22,1

95.9

3.9

3.3

5.9

5.6 5.

9

7,00

0.0

6,71

3.5

5,53

2.0

6,41

0.4

7,14

0.4

0.7

1.0

0.7

0.9

1.0

776.

2

643.

0

1,20

6.5

1,19

1.0

1,26

3.7

10,2

04.8

6,94

6.1

7,65

9.7

7,42

4.0

6,89

4.8

5.2

7.5

16.5

15.8

17.7

million on the back of improved performance

Profit attributable to equity holders grew

28




Simplified Group Statement of Financial Position & Segmental Analysis

Property, plant and equipment

Intangible assets

Available-for-sale investments

Inventories

Trade and other receivables

Cash and bank balances

Other non-current receivables

Other assets

16.0%

2.4%

9.3%

0.4%2.0%

16.1%

0.2%0.8%

16.3%

0.7%

28.8%

0.1%6.9%

Share capital

Share premium

Other reserves

Retained profits

Non-controlling interests

Borrowings

Derivative financial instrumens

Deferred tax liabilities

Deferred income

Trade and other payables

Customer deposits

Advance rental billings

Taxation and zakat

63.5%

65.9%

2.4%1.4%

1.5%

10.4%

18.9%

1.0%0.9%

2.7%

1.5%

1.1%

9.9%

16.8%

1.0%1.1%

0.7%

32.2%

0.2%

5.4%

16.0%

9.6%

1.9%0.6%

2.3% 11.3%

0.2%0.7%

18.9%

2011 2012

2011 2012

TOTAL ASSETS

TOTAL LIABILITIES & SHAREHOLDERS’ EqUITY

29



Simplified Group Statement of Financial Position

& Segmental Analysis

90.8%

2011 2012 2011 2012

91.2%

Malaysia

9.2% 8.8%

Other Countries

74.5%

2011 2012 2011 2012 2011 2012 2011 2012

8.4% 7.7% 9.2% 8.8% 7.9% 8.9%

74.6%

Segment Operating Revenue for the financial year ended 31 December

Retail Business

BY

BU

SIN

ESS

Wholesale Business

GlobalBusiness

Shared Services/Others

85.9%

2011 2012 2011 2012

90.9%

Malaysia

14.1%9.1%

Other Countries

75.0%

2011 2012 2011 2012 2011 2012 2011 2012

12.8% 9.4% 14.1% 9.1%

-1.9%5.2%

76.3%

Segment Results for the financial year ended 31 December

Retail Business

Wholesale Business

GlobalBusiness


96.8%

2011 2012 2011 2012

96.1%

Malaysia

3.2% 3.9%

Other Countries

10.3%

2011 2012 2011 2012 2011 2012 2011 2012

3.2% 3.4% 2.5% 2.6%

84.0% 84.8%

9.2%

Segment Assets as at 31 December

Retail Business

Wholesale Business

GlobalBusiness


BY

GEO

GR

AP

HIC

AL

LOC

ATIO

N

30




Group QuarterlyFinancial Performance

In RM MillionFirst

quarterSecond

quarterThird

quarterFourth

quarterYear2012

Operatingrevenue 2,383.8 2,425.0 2,375.4 2,809.3 9,993.5Operatingprofitbeforefinancecost 273.4 297.1 222.4 394.3 1,187.2Profitbeforetaxationandzakat 299.3 185.6 238.5 346.2 1,069.6Profitattributabletoequityholders

oftheCompany250.6 348.5 301.4 363.2 1,263.7

Basicearningspershare(sen) 7.0 9.7 8.4 10.2 35.3Single-tierdividendpershare(sen) – 9.8 – 12.2 22.0

In RM MillionFirst

quarterSecond

quarterThird

quarterFourth

quarterYear2011

Operatingrevenue 2,148.2 2,233.6 2,321.7 2,447.2 9,150.7Operatingprofitbeforefinancecost 231.6 237.5 510.1 265.7 1,244.9Profitbeforetaxationandzakat 227.3 207.1 337.2 229.6 1,001.2Profitattributabletoequityholders

oftheCompany163.3 127.2 302.2 598.3 1,191.0

Basicearningspershare(sen) 4.6 3.6 8.4 16.7 33.3Single-tierdividendpershare(sen) – 9.8 – 9.8 19.6

2012

2011

31



COMMITMENT TO SHAREHOLDERSTMremainscommittedtocontinuouslycreatingvalueforourshareholders in our pursuit to become Malaysia’s leadingnext-generationcommunicationsprovider.

Inthefinancialyear2012,wedemonstratedthiscommitmentbydeclaringapaidandproposedtotalnetdividendpayoutofRM787.0milliontoourshareholders,whichconsistedof:

• An interim dividend of 9.8 sen per share amounting toRM350.6millionwhichwaspaidon28September2012;and

• Aproposedfinaldividendof12.2senpershareamountingtoRM436.4million.

In 2012, we outperformed our peers in share priceperformance and remained among the top telcos in termsof totalshareholderreturn.Our12-monthtotalshareholderreturnasat31December2012was37.43%andfromthedateofourdemerger(25April2008)upto31December2012,was237.12%.

Shareholder Base

Ourshareholderbaseasat31January2013comprised26,593institutionalandprivate/retailshareholders.OursubstantialshareholdersareKhazanahNasionalBerhad,theEmployeesProvident Fund (EPF) and AmanahRaya Trustees Berhad –Skim Amanah Saham Bumiputera, which together accountfor 52.99% holding of the Group. Meanwhile, our foreignshareholdingasat31January2013stoodat15.13%.

Transparency

We continue to maintain high levels of transparency in ourfinancialreporting,andareequallystringentinourcorporategovernance. Our operations are guided by the MalaysianCode on Corporate Governance, the Main Market ListingRequirements of Bursa Malaysia Securities Berhad (BursaSecurities)aswellasinternationalbestpractices.

Asaresponsiblecorporatecitizencommittedtoconservingtheenvironment, we published our fourth Sustainability Reportin 2012, which was accorded the Global Reporting Initiative(GRI)ratingofA+.Inaddition,wewontheBestSustainabilityAwardforMalaysiafromtheNationalCenterforSustainabilityReportinginJakarta.

In2012,wealsowonintwocategoriesattheNationalAnnualCorporate Report Awards (NACRA) – the Silver Award forOverall Excellence for Best Annual Report and the IndustryExcellenceAwardforMainBoardCompaniesundertheTrade&ServiceCategory.

0

1,000

2,000

3,000

4,000

2008

708.5

6.4%

98.8%

150.9%124.2%

110.5%

89.3%

6.5%5.6%

4.0%3.6%

700.0

3,505.8

468.3706.5

563.7700.3

1037.4

634.8 701.2

1,073.2881.0 787.01

2009 2010 2011 2012

Normalised PATAMI1

RM million

Ordinary Dividend Capital Repayment Capital Distribution

Payout 3 Net Dividend Yield 2

1 2012 interim dividend of 9.8 sen & final dividend of 12.2 sen2 Net Dividend Yield based on closing price at year end3 Excludes capital distributions/repayments

Dividend Payout Policy of RM700 mnor up to 90.0% of Normalised PATAMI whichever is higher

SHAREHOLDERS’ RETURN

inVeSTORReLaTiOnS

32




Inaddition,TMwasrecognisedattheAlphaSoutheastAsia’sInstitutional Investor Corporate Awards for Malaysia 2012wherewewonfortheBestAnnualReport,andwereamongthetopthreefortheMostOrganisedInvestorRelations,MostConsistentDividendPolicy,andBestStrategicCSR.

DIVIDEND POLICYWe reiterate our dividend commitment as stated in ourdividendpolicystatement:

“In determining the dividend payout ratio in respect of any financial year after the Proposed Demerger, our Company intends to adopt a progressive dividend policy which enables us to provide stable and sustainable dividends to our shareholders while maintaining an efficient capital structure and ensuring sufficiency of funding for future growth.

Our Company intends to distribute yearly dividends of RM700 million or up to 90.0% of our normalised PATAMI, whichever is higher.

Dividends will be paid only if approved by our Board out of funds available for such distribution. The actual amount and timing of dividend payments will depend upon our level of cash and retained earnings, results of operations, business prospects, monetisation of non-core assets, projected levels of capital expenditure and other investment plans, current and expected obligations and such other matters as our Board may deem relevant.”

TM CREDIT RATINGTM continues to exhibit strong fundamentals and a soundbalancesheet.Thisisevidentfromthecreditratingaccordedby both local and international rating agencies. The creditratingsareasfollows:

• RatingAgencyofMalaysia AAA• Moody’sInvestorsService A3• Standard&Poor’sRatingServices A-(standalone

creditprofileof “a-”)

• Fitch A-

TM ExISTING DEBTSLOCAL CURRENCY DEBT

TMISIS A TMISIS BCoupon 6.20% 4.193%Tenure Due2013 Due2018Principal (RM) 2,000,000,000 925,000,000Note:TMISISisanabbreviationforTMIslamicStapledIncomeSecurities

MTN 250621

MTN 130921

MTN 101221

MTN130522

MTN191222

Coupon 4.50% 4.20% 4.20% 4.00% 3.95%Tenure 10years 10years 10years 10years 10yearsPrice 104.44 102.26 102.24 100.70 100.16Yield 3.88 3.89 3.90 3.91 3.93Principal (RM) 300,000,000 300,000,000 200,000,000 250,000,000 300,000,000Note:MTNisanabbreviationforMediumTermNote

FOREIGN CURRENCY DEBT

Global Bond 20141

Global Bond 20251

Coupon 5.25% 7.875%Price 106.25 143.78Yield 1.54 3.53Principal (USD) 465,055,000 300,000,0001 Bondpriceasof31December2012

Term LoanInterest Rate 0.91375%1

Tenure Due2017Principal (JPY) 7,800,000,0001 TheloanwasswappedtoRMexposurewithaninterestrateof3.62%

We remain committed to maintaining our investment gradecreditratingsandwillcontinuewithourprudentapproachtofinancialandcapitalmanagement.

33



Investor Relations

INVESTOR RELATIONSWeplacegreatemphasisonmaintainingastrongrelationshipwith our investors. To ensure that they are kept abreast ofour strategies, performance and key business activities, wecontinuously engage with our investors through a plannedinvestorrelationsprogramme.

ThisroleiscarriedoutbytheInvestorRelationsunit,whosekeyfunctionistoproactivelydisseminaterelevantandtimelyinformationonTMtotheinvestingcommunity.

Toensurecompliancewithbestpractices,allcommunicationwiththecapitalmarketisgovernedbyourInvestorRelationsPolicy and Guidelines and is line with the Bursa MalaysiaCorporateDisclosureGuide2011whichguarantees fairandtimelydisclosureofinformationtoallshareholders.

quarterly Financial Results Announcement and Briefing

SubsequenttothereleaseofourquarterlyearningsdisclosurestoBursaSecurities,briefingsareheldforanalystsandfundmanagers/investorsviateleconferencing.Thesesessionsarechairedby theGroupCEOtogetherwith theGroupCFOandattendedbySeniorManagementrepresentingTM’skeyLinesofBusiness.TheobjectiveistoensureclearunderstandingofthefinancialandoperationalperformanceoftheGroup.

Financial Results Presentations

Inanon-goingquest to improve the levelofourdisclosure,emphasis is placed on presentation materials used todisseminate information on TM. Presentation slides ofour results are prepared in an investor-friendly mannerto aid understanding of the Group’s financial results andperformance. These are made available promptly on theCompany’s website following the release of information toBursa Securities. A copy of the presentation slides is alsodistributedbye-mailtoanalystsandinvestorswhoareonthedistributionlistofourInvestorRelationsunit.

Investor Engagement

• One-on-one Meetings, Conference Calls and Investor Conferences

TheGroupCEO,GroupCFOandInvestorRelationsteamactively carry out Investor Relations activities such asholding regular meetings and conference calls withfund managers, analysts, rating agencies and otherstakeholders, in Malaysia and abroad. On occasion,members of Senior Management and the Board ofDirectorsalsoparticipateintheseactivities.

In 2012, we reached out to a wider investor audienceinternationally by participating in non-deal roadshowsand conferences in the US and Thailand, in addition toSingaporeandHongKong.

Locally, TM also participated in small group meetingsaswellaslargegrouppresentationsorganisedbylocalandforeignresearchhouses.Throughouttheyear,morethan 300 meetings and conference calls with investorsandanalystswereconducted.

• Investor Relations Portal

In our efforts to enhance stakeholders’ access to theCompany,theInvestorRelationsunitmaintainsaportal,http://www.tm.com.my/ap/about/investor/Pages/home.aspx, on TM’s corporate website, which serves as anexcellent platform of communication and source ofinformation for shareholders and the general public.TheportalcontainstheGroup’sannualreports,financialresults, investor presentations, capital structureinformation, press releases and disclosures to BursaSecurities.Theportalisupdatedinacomprehensiveandtimelymanner.

• Feedback

TM recognises and highly values feedback from theinvesting community. This helps to ensure that weconstantly meet their requirements while furtherimproving our relationship with this stakeholder groupthrough direct communication. To further enhanceour Investor Relations function, we seek constructiveideas through on-going engagement with stakeholdersas well as provide an avenue through which they [email protected].

34




Wehavebeen listedonBursaMalaysiasince1990. In2012,TMsharesrecordedatotalturnoverofRM11,246million,with2,023millionsharestradedascomparedtoa total turnoverofRM7,609millionwith1,879millionsharestradedin2011.

SHARE PRICE & VOLUME TRADED2012MonthlyTradingVolume&Highest-LowestSharePrice

159,

336

132,

304

197,

783

101,

816

155,

485

173,

025

228,

668

115,

975

187,

065

173,

850

253,

482

143,

902

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Volume (’000) Lowest (RM)Highest (RM)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Volume(‘000) 159,336 132,304 197,783 101,816 155,485 173,025 228,668 115,975 187,065 173,850 253,482 143,902

Highest(RM) 4.99 5.22 5.37 5.45 5.53 5.85 6.31 6.09 6.26 6.40 6.00 6.04

Lowest(RM) 4.71 4.77 5.04 5.30 5.21 5.33 5.56 5.64 5.79 5.97 5.31 5.43

STOCKPeRFORManCe

35



Stock Performance

JAN

TM Share Price

FBM KLCI Index

FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Share Price(RM)

FBM KLCIIndex

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

1,100

1,200

1,300

1,400

1,500

1,600

1,700

1,800

1,900

2012 Interim Dividend of 9.8 sen per shareCapital Repayment of 30 sen per share2011 Final Dividend of 9.8 sen per share

TM SHARE PRICE PERFORMANCE VS FBM KLCI 2012

MARKET CAPITALISATION/ SHARE PRICE

2008 2009 2010 2011 2012

11,0

18

10,9

45

12,5

55

17,7

42

21,6

05

3.08 3.06

3.51

4.96

6.04

Market Capitalisation(RM Million)

Share Price (RM)

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24 FEBRUARY 2012Announcement of the audited consolidated results,declaration of final single-tier dividend of 9.8 senpershareforthefinancialyearended31December2011andProposedCapitalRepaymentof30.0senpersharetoShareholders(CapitalRepayment).

13 APRIL 2012Issuance of the 27th AGM and Extraordinary GeneralMeeting(EGM)NoticestogetherwiththeAnnualReportfor the financial year ended 31 December 2011 andCirculartoShareholders.

8 MAY 201227thAGMandEGMoftheCompany.

24 MAY 2012Date of entitlement to the final single-tier dividend of9.8 sen per share for the financial year ended31December2011.

30 MAY 2012Announcementoftheunauditedconsolidatedresultsforthe1stquarterended31March2012.

8 JUNE 2012Dateofpaymentofthefinalsingle-tierdividendof9.8senpershareforthefinancialyearended31December2011.

31 JULY 2012DateofentitlementtotheCapitalRepayment.

15 AUGUST 2012Completion date of the Capital Repayment and dateofpaymentoftheCapitalRepayment.

29 AUGUST 2012Announcementoftheunauditedconsolidatedresultsforthe2ndquarterended30June2012anddeclarationofaninterimsingle-tierdividendof9.8senpershareforthefinancialyearended31December2012.

14 SEPTEMBER 2012Date of entitlement to the interim single-tier dividendof 9.8 sen per share for the financial year ended31December2012.

28 SEPTEMBER 2012Date of payment of the interim single-tier dividendof 9.8 sen per share for the financial year ended31December2012.

FinanCiaLCaLenDaR

37



Financial Calendar

30 NOVEMBER 2012Announcement of the unaudited consolidated resultsforthe3rdquarterended30September2012.

27 FEBRUARY 2013Announcement of the audited consolidated resultsanddeclarationof finalsingle-tierdividendof12.2senpershareforthefinancialyearended31December2012.

12 APRIL 2013Issuanceofthe28thAGMNoticetogetherwiththeAnnualReport for the financial year ended 31 December 2012andCirculartoShareholders.

7 MAY 201328thAGMoftheCompany.

10 MAY 2013Date of entitlement to the final single-tier dividendof 12.2 sen per share for the financial year ended31December2012.

27 MAY 2013Date of payment of the final single-tier dividendof 12.2 sen per share for the financial year ended31December2012.

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trust

40 CorporateProfile42 MilestonesOverTwoCenturies46 MediaMilestonesin201248 2012CorporateEvents54 Awards&Recognition201256 TMPastAwards64 CorporateInformation66 ContactUs68 GroupCorporateStructure70 GroupOrganisationStructure

Corporate Profile

We are passionate about accomplishing greatness in all aspects of our business. We accept every challenge that comes along; overcoming obstacles to give our best, always raising the performance bar.

Corporate Profile

tM is the largest integrated communications solutions provider in Malaysia, and a leading regional telco. in supplying the country with cutting-edge telecommunications, it has gained recognition for rolling out one of the fastest and lowest cost high speed broadband (HsBB) programmes in the world. the Company is now building on its next-generation network to lend further support to the country’s development into becoming a high-income nation. it is gearing up to complete its transformation from a telephone exchange into an information exchange, supplying the communications needs of all Malaysians domestically, regionally and internationally.

Since being established as the TelecommunicationsDepartment of Malaya in 1946, TM has developed andcontinuouslyimprovedthecountry’stelecommunicationsandbroadcastinginfrastructure.By2008,ithadbecomearegionaltelcopowerhousewithpresenceinnineAsiancountriesotherthanMalaysia.Astrategicdemergerwasthencarriedouttoseparate the regionalmobileoperations–nowmanagedbyAxiata;andtherestofthefixedlinebusiness,managedbyTM.

Theyear2008wasalsoa turningpointonanother front. InSeptember,TMsignedapublicprivatepartnershipwith theGovernment of Malaysia to build and deliver HSBB, leadingto a spectacular roll-out of the service. Within 18 months,UniFi,thenation’sfirstHSBBservice,waslaunched.TMhassince been extending the service to more areas nationwide,achieving 1.377 million premises passed by end 2012, onschedule and below budget. The take-up rate of UniFi hasincreased in tandem, and reached 400,000 subscribers fivemonthsaheadofschedulein2012.

AsMalaysia’sbroadbandchampionandtodeliveranenhancedand integrated digital lifestyle to all Malaysians whereeveryone can connect, communicate and collaborate, TM isopeningitsHSBBinfrastructuretootherserviceproviders.Asatend2012,fourtelcoshavesignedupforaccessservice.

aBOUTUS

40


Corporate Profilewww.tm.com.my


Tofurtherenhancethecontentindustry,TMiscollaboratingwith industry players and the Multimedia DevelopmentCorporation (MDeC) to develop a vibrant Content ServiceDelivery Platform (CSDP), My1Content. The neutral andopenportalwillassistlocalcontentpreneursgainafootholdinthelocalmarketwhileexposingthemtotheregionalandinternationalmarkets.

At the same time, TM is forging more partnerships withleading ICT providers locally and internationally to feedgrowing demand for sophisticated products and services.ICTarm,VADS, isspearheadingTM’s foray into the ICTandbusiness process outsourcing (BPO) sectors, where TM isalreadymakingitspresencefelt.ItisthefirstinMalaysiaandsecond inSoutheastAsia toprovideTelePresenceExchange(TPX)servicesandthefirstinMalaysiatooffercomprehensivethree-layer cloud services and a technology neutral cloudinfrastructure.

In support of the Government’s vision to transform thecountryintoamultimediahub,TMisupgradingitsnetwork,systemsandproducts internallywhile furtherenhancing itsinternational network capacity. The first phase of CahayaMalaysia (ASE), TM’s first private submarine cable networkdeveloped with NTT Communications Corporation, went liveon20August2012connectingMalaysiatoJapan.Thesecondphase,whichwillconnectMalaysiaandJapantotheTseungKwanlandingstationinHongKong,wascompletedinMarch2013,andisnowreadyforservice.

ThemanychangestakingplaceatTMhaveledto increasedfocus on training and development of its over 27,000employees, to ensure they have the knowledge and skillsrequiredofan informationexchange.At thesame time, theCompanyisreinforcingacustomer-centricmindsetfocusingon a positive customer experience at every touch point. In2012, TM initiated and adopted customer-oriented KPIs toimprove the customer experience at its contact centres forVoice,BroadbandandUniFiservices.The entire business model of the organisation is alignedaccording to TM’s seven principal customer segments ofConsumer,SME,Enterprise,Government,Wholesale,Globaland New Media. This business structure enables greatersynergies to be created between the various divisions, andallows TM to target its product and service offerings morespecificallytotheneedsofthedifferentniches.Thisincludescommunitiesinruralandremoteareas,whoarereachedvia15mobileTMpointonWheels.

The Company’s commitment to serving the people reflectsa deep-rooted sense of corporate responsibility (CR) thatunderlinesallitsactions.Asaformerstate-ownedenterprise,TM continues to bridge the digital divide. It also placesmuch emphasis on education, which has been the focus itsfoundation, Yayasan TM (YTM), since its establishment in1994.Todate,YTMhasdisbursedatotalofRM444.8millioninscholarshipsthathavebenefitedatotalof12,979students.Atthesametime,TM’sMultimediaUniversity,setup16yearsago as the country’s first private university, has produced atotalof30,484graduates.

Asaresponsiblecorporatecitizen,TMisalsoconsciousofitsdutytoreduceitscarbonfootprintandtakesintoconsiderationthe environmental impact of all its business decisions toensureasustainablefuture.

In2011,itlaunchedaCarbonManagementPlanandcarriedout a group-wide audit of carbon emissions to serve as abaseline for future activities to reduce this. Progress of theCarbonManagementPlanandothersustainabilityinitiativesarehighlightedinTM’sannualSustainabilityReport.

Excellence inTM isanon-going themethatcutsacross theboard,andisreflectedinawardsforalmosteveryaspectoftheCompany’soperations. In2012,TMwonTheBrandLaureateTopTenMastersAwards2012 for theMostPreferredBrandinICT–Broadband;thePC.Com12thReadersChoiceAwards2011forBestWiredBroadband;the2012Frost&SullivanAsiaPacific ICT Award, Singapore, for Fixed Broadband ServiceProvideroftheYear;theEmployerofChoiceGoldAwardintheMalaysiaHRAwards;theSilverAwardforOverallExcellenceat the National Annual Corporate Report Awards 2012; andthe Best Sustainability Award by the National Center forSustainability Reporting (NCSR), Jakarta. VADS, meanwhile,won a string of awards, including two Golds at the ContactCentre World Awards; and the 2012 Global Services 100ProviderontheGlobalBPOChallengerscategory.

TM has transformed the telecommunications landscapein Malaysia in the 66 years of its existence. Throughout itsjourney,ithasbuiltasoundreputationforalwaysdeliveringon itspromises.TheCompany’smessage,as itevolves intothe exciting next-generation era of telecommunications is,therefore,appropriate–TrustUs.

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Corporate Profile www.tm.com.my

TM is Malaysia’s Broadband Champion

1800s

1900s

1874 ThetelephonemakesitsdebutinPerak

1882 Perak and Penang are linked by telephone via asubmarinecable

1891 ThefirsttelephoneexchangeiscommissionedinKualaLumpur

1894 A submarine cable links Labuan with Singapore andHongKong

1900 The first magneto telephone service is introduced inKudat,Jesselton(KotaKinabalu)andSandakan

1908 Incorporationofpostalandtelegraphservices

1926 Adventofradiocommunicationsinthecountry

1946 EstablishmentoftheTelecommunicationsDepartmentinMalaya

1962 Introduction of Subscriber Trunk Dialling (STD)between Kuala Lumpur and Singapore via the firstlong-distancemicrowavelink

1963 •Expansion of the microwave network throughoutMalaysia

•LaunchoftelevisionservicesinPeninsularMalaysia

1968 The Telecommunications Department of Sabah andSarawak merges with Peninsular Malaysia, formingtheTelecommunicationsDepartmentofMalaysia

1970 Thefirst internationalstandardsatelliteearthstationiscommissionedinKuantan,markingtheadventoflivetelecastsinMalaysia

1975 EstablishmentoftheAutomaticTelexExchange

1979 IntroductionofInternationalDirectDial(IDD)facilities

1980 MalaysiacommissionsitsownsubmarinecablelinkingKuantanandKuching

1982 Introduction of Telefax and International MaritimeService

1983 Introductionofdatacommunications

1984 Introduction of packet switch technology, leading toMalaysia’sownpublicdatanetwork

1985 •CommissioningoftheATURserviceusing450analogcellularradiotechnology,afirstinAsia

•Introduction of the Multi Access Radio System,providing rural customers with easier access totelephoneservices

1987 Jabatan Telekom Malaysia (JTM) is corporatised,forming Syarikat Telekom Malaysia Berhad (STMB),thenation’sfirstprivatisedentity

1988 IntroductionofdigitalINTELSATBusinessService

1989 Introductionofthe800toll-freeservice

1990 •Introduction of international toll-free and prepaidcardphone(Kadfon)

•ListingofSTMBontheMainBoardofBursaMalaysiaSecurities Berhad and introduction of the newcompanylogo

1991 •TheCompanyisrebrandedasTelekomMalaysia

•IntroductionofMalaysiaDirect,HomeCountryDirect

1992 IntroductionofVideoConferencingandCENTREX

1993 IntroductionofISDNservices

1996 Introduction of 1800 MHz digital TMTOUCH cellularservices

1997 Introduction of Corporate Information Superhighway(COINS), Telekom Malaysia’s state-of-the-art, high-capacityenterprisesolution

MiLeSTOneSOVeR TWO CenTURieS

42




2000s

2001 •Launch of BlueHyppo.com, Telekom Malaysia’slifestyleInternetportal,whichrecordsmorethan290millionsearchesayear

•IntroductionofbroadbandserviceswiththelaunchofStreamyx

•Telekom Malaysia becomes a major partner in thelaunchofthestate-of-the-artsubmarinecableAsiaPacificCableNetwork2(APCN2)

•Establishment of TM Net as the largest InternetServiceProviderintheSoutheastAsianregion

•LaunchofCDMAfixedwirelesstelephonyservice

2002 Awardofthe3GspectrumtoTelekomMalaysia

2003 MergerofCelcomandTMTOUCH, formingMalaysia’slargestcellularoperator

2004 RestructuringofTMTelCointotwoStrategicBusinessUnits(SBUs)–TMWholesaleandTMRetail

2005 •Telekom Malaysia undergoes a major rebrandingexerciseandTMisadoptedasthenewbrand

•Launchof3GServices–firstinMalaysia

•Acquisition of 27.3% interest in PT ExcelcomindoPratamaTbkofIndonesia

2006 •TM forges strategic partnership with Vodafone,becomingaVodafonePartnerNetworkwithaglobalreachofanestimated179millionmobilecustomersworldwide

•TMimplementsthesecondphaseofitsrestructuringexercise, organising the Group’s business intoMalaysiaBusiness,Celcom,TMInternationalandTMVentures

•XL,TM’sIndonesiansubsidiary,securesa3GlicencewhileDialog,TM’ssubsidiaryinSriLanka,launchesSouthAsia’sfirst3Gservice

•Acquisition of the remaining 49.0% in TelekomMalaysia International (Cambodia) CompanyLimited (formerly known as Cambodia SamartCommunicationsLtd),Cambodiaand49.0%interestinSpiceCommunicationsPrivateLimited,India

•TM initiates a consortium to develop an underseacable system, Asia-America Gateway (AAG), linkingSoutheastAsiaandUSA

2007 •TM becomes the first Malaysian company to benamedServiceProvideroftheYearat2007Frost&SullivanAsiaPacificICTAwards

•ThefirstcommemorativebooktitledTransforming a Legacy,islaunchedbyDato’SeriAbdullahHjAhmadBadawi,PrimeMinisterofMalaysia

•Divestment of TM’s Payphone business to PernecCorporationBerhad

•TM’saffiliateinIndia,SpiceCommunicationsLimited,commencestradingontheBombayStockExchangeand receives the National and International LongDistancelicences

•TMGroupundertakesademergerexerciseresultingin two distinct entities – TM and TM International(TMI)

2008 •TM Group is officially demerged in April and TMIlistedasaseparateentityonBursaSecurities

•IRDAandTMsignanMOUforTMtobethepreferredtelecommunications provider for the IskandarMalaysiaregion

•TM privatises VADS as part of its strategic growthplan

•TMbags threeawardsat the2008Frost&SullivanMalaysiaTelecomAwards includingTheAlternativeVoiceServiceProviderofTheYearforthefirsttime

•TM signs a Public Private Partnership (PPP)agreementwiththeGovernmenttorollouttheHighSpeedBroadband(HSBB)project

•TMgrabsfiveNACRA2008awards,includingtheGoldAward for Overall Excellence, Silver for CorporateSocial Responsibility and Best Designed AnnualReport

•TMandVerizoncollaborate todevelopand improveLocalIPcapabilities

2009 •TMdisclosesIndicativeTerms&ConditionsforHSBB(Wholesale)service

•TMwins threeawardsat the2009Frost&SullivanMalaysia Telecom Awards, including BroadbandServiceProvideroftheYearforthefifthyear

•MMUmakestheTop200AsianUniversitiesinQS.comAsiaUniversitiesRankings2009

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Milestones Over Two Centuries

•TM signs Wi-Net on as its first HSBB (Wholesale)customer

•TM joins a new submarine cable consortium todeveloptheAsiaPacificGateway(APG)

•TM’s core network infrastructure is upgraded toNext-GenerationNetwork(NGN)technology

•TM commences physical work for HSBB accessinfrastructure

•AAG,anewunderseacablelinkingSoutheastAsiatoUSA,startscommercialtraffic

•TM wins four awards at NACRA 2009, includingGold for Overall Excellence, Corporate SocialResponsibility and Best Annual Report in BahasaMalaysia

2010 •TMpoint On Wheels (TMOW) is launched for addedconveniencetocustomersinunder-servedareas

•TM signs a pact with Manchester United to be theOfficial Integrated Telecommunications Partner oftheEnglishfootballclubinMalaysia

•20contentpartnersjoinhandswithTMtoprovideadiversemixofcontentforTM’sIPTVservice

•TM delivers its promise of launching the nextgeneration High Speed Broadband (HSBB) servicewiththebrandnameUniFi

•The inaugural TM Earth Camp for school children,organisedincollaborationwiththeMalaysianNatureSociety(MNS),isheld

•TMisconferredtheAnugerahMajikanPrihatinfromtheMinistryofHumanResourcesforthefirsttime,inconjunctionwiththe2010LabourDaycelebration

•HyppTV, TM’s IPTV service, offers UniFi customerslinear,premiumandVoDtitles

•TM wins the First Runner-Up Overall award at theMalaysian Business – CIMA Enterprise GovernanceAwards2010

•TM signs Maxis on as the first service provider tosubscribetoTM’sHSBB(Access)service

•Deployment of TM’s HSBB service, UniFi, reachesmorethan750,000premisespassedand48coverageareas

•TMwinsfiveawardsatNACRA2010,includingGoldsforOverallExcellenceandBestDesignandPlatinumforCorporateSocialResponsibility

2011 •TM collaborates with NTT to establish a newsubmarine cable system, Cahaya Malaysia,connectingMalaysiatoHongKongandJapan

•TM records profit of RM1,206.5 million in 2010, anincreaseof87.6%fromthepreviousyearandmeetsallthreeHeadlineKPIs

•Menara Kuala Lumpur Sdn Bhd signs a 10-yearconcession agreement with the Government ofMalaysia for the operation, management andmaintenanceofMenaraKualaLumpur

•UniFicelebratesitsfirstanniversary

•TMclinchesfourawardsatthe2010Frost&SullivanMalaysia Telecoms Awards – Broadband ServiceProvider of the Year, Data Communications ServiceProvideroftheYear,ManagedServiceProvideroftheYear and Managed Security Service Provider of theYear

•TM galvanises the nation’s sports spirit with thelaunchofTeamMalaysia

•TMoffersthefirstManagedTelePresenceservicesinMalaysiaincollaborationwithCisco

•UniFi’s100,000thcustomerreceivesatripofalifetimetoWembleyStadium,London, towatchManchesterUnitedFC’sChampionsLeaguematch

•As part of its environment conservation activities,TMplants200 treesatZooNegaraandadopts twoMalayantapirs

•VADSbecomes thecountry’sfirstcloudproviderbypartnering with MIMOS to offer cloud computingservices

•TM further entrenches its support for nationalfootball by becoming the official partner of thenationalfootballteam

•TM signs a partnership with NAZA TTDI to installHSBBinthefirstUniFitownshipprojectintheCentralregion

•UniFireachesMelakaandKedah,aheadofschedule

•TMpartnerswithGoogletoofferGoogleAdWordstoSMEsinMalaysia

•TM introduces its geomatic application – TMSmartMap

•TM inks HSBB Wholesale service agreements withCelcom Axiata Berhad and Packet One NetworksSdnBhd

•TMestablishesastrategicpartnershipwithAkamaitohostAkamai’sNetStorageonTM’snetwork

44




•Launch of Gemuruh Suara song and music video,as part of Team Malaysia’s campaign, ignites thepassionofsportsfans

•TMlaunchesitspoint-basedloyaltyprogramme,TMRewards

•TM signs its second HSBB service agreement withDynastyViewSdnBhdtoinstallHSBBinanewphaseof theSeriAustin residentialdevelopment inJohorBahru

•TMtakeshometophonoursatNACRA2011withtheOverall Excellence Platinum Award for its AnnualReport

•TM is honoured as the ICT Organisation of theYear and also wins the ICT Personality of the Yearat PIKOM’s 25th Anniversary Gala Dinner and ICTLeadershipAwards2011

•TMsignsadealwithGJHAvenueSdnBhdtoinstallHSBB in Phases 1 and 2 of Taman Paya RumputPerdana, making these the first UniFi-equippedtownshipsinMelaka

•TM clinched the Best Wholesale Ethernet ServiceAPAC2011awardbyMetroEthernetForum(MEF)attheCarrierEthernetServiceProviderAwardsAPAC2011inSingapore

•TM adds Office 365 to its suite of world-class ICTsolutionsthroughapartnershipwithMicrosoft

•The Batam-Dumai-Melaka (BDM) submarine cablesystem goes live, ready to carry commercial datatraffic

2012 • UniFireachesPerak,TerengganuandPahang

• TM launches its Integrity Pact, strengthening theCompany’scommitmenttototalintegrityacrosstheGroup

• TM turns in a strong full-year performance for thefinancial year 2011, with revenue of RM9.15 billionandexceedingallthreeheadlineKPIs

• TMinksanHSBBWholesaleserviceagreementwithREDtone

• UniFiturnstwo

• CapitalTV,Malaysia’sfirstlocalbusinesstelevisionchannel,islaunchedandcomesonboardHyppTV

• TMholdsthefirstTMCareer&EducationFair2012

• TMembarksonanationwideCableTheftPreventioncampaign

• SKPendidikanKhasPekanTuaran,Sabahbecomesthe first school for special needs children to beadopted under TM’s PINTAR School AdoptionProgramme

• TMclinchesfourawardsatthe2012Frost&SullivanMalaysia Excellence Awards, including the covetedServiceProviderof theYearaward,whichwaswonforthefirsttimesincethe2008demerger

• FournewHyppTVchannels–EC Inspirasi,OutdoorChannelHD,UTVStarsandKidsCo–areaddedtoHyppTV’sgrowingstable

• TM bags the Best Broadband Carrier award atTelecomAsiaAwards2012inBangkok

• TM’sfirstdatacentreoutsideMalaysiaopensinHongKong

• TM gears up for IPv6 adoption with an IPv6-readynetwork

• TM’s broadband subscriber base hits the 2 millionmark

• My1Content portal, a national repository of localcontentdevelopedbyTM,islaunched

• TM organises the Team Malaysia Fan Run 2012 torallysupportforMalaysianOlympians

• PrimeMinisterDato’SriMohdNajibTunHajiAbdulRazak makes his maiden visit to TM ConventionCentre and officially launches the conventionfacilities

• UniFisurpassesthe400,000subscribersmarkaheadofitsyear-endtarget

• TMextendstheProgramSejahteratoKelantan,withthelaunchofthesecondphaseoftheprogramme

• Cahaya Malaysia, TM’s latest submarine cablesystem,startscarryingtraffictoHongKong

• HyppTV launches its first dedicated live sportschannel–HyppSportsHD

• MembershipoftheTMRewardsloyaltyprogrammehits1,000,000

• TM introduces UniFi BIZ30 and BIZ50 packages aswellasHyppTVforUniFiBizpackages

• TM signs collaborative agreements with relevantparties towards the creation of a Smart andConnectedNusajaya

• VADSextendsitsTelePresencereachworldwideviacollaborationwithAT&T

45



MeDia MiLeSTOneS in 201246




47



1 2

3 4

2012CORPORaTeeVenTS

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1 19 JANUARY UniFi Launch in Perak UniFi was launched in Perak by Dato’ Dr Mah Hang

Soon, Perak State Exco of Health, Local Government,Consumer Affairs, Public Transportation and Non-Muslim Affairs, who represented Dato’ Seri DiRajaDr Zambry Abd Kadir, Menteri Besar of Perak. Dato’Joseph Salang, Deputy Minister of Information,CommunicationsandCulture,wasalsopresent.

20 JANUARYIntegrity Pact with VendorsTM launched an Integrity Pact with its vendors to furtherstrengthen the multiple integrity initiatives adopted in itsbusinessoperations.ThelaunchwasattendedbyDato’SriHajiAbuKassimMohamed,ChiefCommissioneroftheMalaysianAnti-CorruptionCommission(MACC).

22 FEBRUARYLaunch of TM Media Delivery ServiceThe TM Media Delivery Service (TM MDS) was launched inpartnership with Octoshape, an industry leader in globalstreamingtechnologies.

2 14 MARCH REDtone signs on for HSBB TMsignedanMoUwithREDtoneMarketingSdnBhdfor

theprovisionofHSBBservice.TMwasrepresentedbyDato’SriZamzamzairaniMohdIsa,TMGroupCEOandDatuk Bazlan Osman, TM Group CFO while REDtonewasrepresentedbyDato’WeiChuanBeng,ManagingDirector and Lau Bik Soon, Group CEO of REDtoneInternationalBerhad.

15 MARCHTM Earth Camp to Carry On TM and the Malaysian Nature Society (MNS) signed anagreement to continue to collaborate on TM’s nationwideenvironmental camps, TM Earth Camp, in 2012. TM wasrepresentedbyDato’SriDrHalimShafie,TMChairmanwhileProfDrMaketabMohamed,MNSPresident,signedonbehalfoftheNGO.

3 22 MARCH Launch of SME BizFest™ TM officially launched its inaugural SME BizFest™

atMenaraKualaLumpur.TheeventwasofficiatedbyAzizi A Hadi, EVP of TM SME, accompanied by Dato’Rozalila Abdul Rahman, TM Chief Marketing Officerand Suzana Mohd Salleh, GM of Small Enterprise,TMSME.

29 MARCHChannel for Corporate Malaysia TM’s HyppTV launched Malaysia’s first local businesstelevisionchannel,CapitalTV,onChannel127.The24-hourdailybusinesschannelisbroadcastinfullhighdefinition(HD).

4 31 MARCH Perak School to have WiFi TM adopted Sekolah Menengah Kebangsaan

Chenderiang in Temoh, Perak, under the third phaseof its PINTAR school adoption programme. SMKChenderiangwillbethefirstPINTARschooltohavefullaccesstoWiFi.

6 APRILTM Career & Education Fair 2012TMorganiseditsinauguralTMCareer&EducationFairfrom6-8 April 2012 at Menara TM. The event was attended byDeputyMinisterofHigherEducationDato’SaifuddinAbdullah,TMChairmanDato’SriDrHalimShafieandTMGroupCEODato’SriZamzamzairaniMohdIsa.

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2012 Corporate Events

5 9 APRIL TM Adopts Special Needs School TMaddedSekolahKebangsaanPendidikanKhasPekan

Tuaran,Sabahtoitslistofadoptedschools,makingittheCompany’sfirstschoolforspecialneedschildren.TheofficialceremonywasattendedbytheMinisterofCommunityDevelopment&ConsumerAffairsofSabah,Datuk Hajah Azizah Datuk Seri Panglima Haji MohdDun,andTMChairmanDato’SriDrHalimShafie.

15 APRILFrench News ChannelThe French community in Malaysia now has a dedicatedchannelforthelatestupdatesoninternationalnews,thankstoa24-hourFrenchnewschannelonHyppTV,France24.

6 3 MAY Strategic Partnership with Panasonic TM and Panasonic Malaysia signed a Collaborative

ArrangementAgreementforastrategicpartnershiptoempowerMalaysianSMEs.TMwasrepresentedbyEVP,SMEAziziAHadiwhile theagreementwassignedonbehalfofPanasonicMalaysiabyitsManagingDirector,JeffLee.

5 MAYEnd of School Adoption Programme CeremonyTMheldaclosingceremonytomarktheendofathree-yearProjek Sekolah Angkat Bersama Kementerian Penerangan,Komunikasi & Kebudayaan (KPKK) adoption programme ofSekolah Menengah Kebangsaan Pakan. The ceremony wasgracedbytheDeputyMinisterofInformation,CommunicationsandCulture,Dato’JosephSalang,andTMChairmanDato’SriDrHalimShafie.

19 MAYKL Tower International TowerthonTheprestigiousKLTowerInternationalDayNightTowerthon2012 was flagged off by the Deputy Minister of FederalTerritoriesandUrbanWellbeing,DatukMSaravanan.

12 JUNE MMU a top private university Multimedia University (MMU) maintained its position as thetopprivateuniversity inMalaysia,accordingtotheQSAsianUniversity Rankings 2012. The annual ranking, which isconductedbyQSQuacquarelliSymondsLtd.,placedMMUinthe191-200band,whiletheorderingoftherankingindicatesthatMMUisranked194inallofAsia.

7 16 JUNE Supporting Malaysian Olympians TM organised a Team Malaysia Fan Run at Dataran

Merdeka to encourage all Malaysians to support ourathletes intheLondonOlympics.Some7,000runnerswereflaggedoffbyDeputyMinisterofYouth&SportsDato’ Razali Ibrahim together with Group CEO Dato’Sri Zamzamzairani Mohd Isa and Chef-de-Mission ofMalaysia’s contingent to London, Tun Dr Ahmad SarjiAbdulHamid.

12 JULYUniFi Reaches East CoastTherolloutofUniFicontinued to theEastCoast,making itsfirststopinTerengganu.TheprovisionofUniFiinTerengganuwasofficially launchedby itsMenteriBesar,Dato’SeriHajiAhmadSaid.

18 JULYPartnership with Milan Utama TMsignedaCollaborativeAgreementwithMilanUtamaSdnBhd to provide enhanced content for a Global PositioningSystem(GPS)navigationsolution.

8 7 AUGUST Celebrating Independence Inconjunctionwith theNationalDaycelebrations,TM

kicked off a nationwide campaign featuring a myriadof activities for its employees and the communities itserves.Thecelebrationwasofficially launchedby theMinister of Federal Territories & Urban Wellbeing,Senator Dato’ Raja Nong Chik Datuk Zainal Abidin,togetherwithTMChairmanDato’SriDrHalimShafie.

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2012 Corporate Events

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TelekomMalaysiaBerhadAnnual Report 2012

9

10 AUGUST Launch of Safety Campaign TM, in collaboration with Polis DiRaja Malaysia,

launcheditsannualOpSelamatsafetycampaign.Thecampaign stretched over a period of two weeks from12-26August2012,with the themeRumah Selamat & Selamat Sampai ke Destinasi (Arrive Safely Home). Itwas launched by Inspector General of Police, Tan SriDato’SriHajiIsmailHajiOmar.

20 AUGUSTCahaya Malaysia Goes LiveTM’s latest international submarine cable system, CahayaMalaysia, which links Malaysia to Japan, began carryingInternettraffic.ItslinktoHongKonghasbeenscheduledforcompletionduringthefirstquarterof2013.

15 SEPTEMBERPahang is UniFi-edTheprovisionofUniFi inKuantan,Pahang,waslaunchedbytheExcoof Information,Science,Technologyand Innovationof Pahang, Dato’ Haji Mohd Sharkar Haji Shamsudin, whorepresented the Menteri Besar. The Deputy Minister ofInformation, Communications and Culture, Dato’ JosephSalang,wasalsopresent.

10 28 SEPTEMBER Launch of Programme IqRA Yayasan Telekom Malaysia (Yayasan TM) and Yayasan

Sofa Negeri Sembilan (Yayasan Sofa) launched theeducationalProgrammeIQRAatSekolahKebangsaanTunku Laksamana Nasir, Seri Menanti, NegeriSembilan.TheeventwasgracedbytheYangdi-PertuanBesarNegeriSembilan,TuankuMuhrizIbniAlmarhumTuankuMunawir.

11 19 OCTOBER In Appreciation of Cable Safety TM organised an appreciation ceremony for the

collaborative efforts of various parties to curb cabletheft nationwide. These included the Polis DiRajaMalaysia (PDRM) and several community groups. Theceremony was attended by Deputy Inspector-GeneralofPolice,TanSriDato’SriKhalidAbuBakar,andTMGroupCEODato’SriZamzamzairaniMohdIsa.

6 NOVEMBERBringing Cloud ServicesTMinkedaCollaborativeAgreementwiththeTechnopreneursAssociationofMalaysia(TeAM)foritsGo-To-MarketinitiativeforTM’sBizAppStore.Thiscollaborationmarksamilestonefor TM by bringing cloud services to Malaysian SMEs. TMwas represented by EVP of SME, Azizi A Hadi, while TeAMwasrepresentedby itsPresident, IrAziz Ismail.VADS’CEO,AhmadAzharYahya,alsosignedtheagreement.

12 18 NOVEMBER Dr Mahathir Awards Entrepreneurs TM honoured the crème de la crème among its

entrepreneurs at the TM Entrepreneur Awards 2012,held at the TM Convention Centre. The awards weregivenawaybyformerMalaysianPrimeMinisterTunDrMahathirMohamad,whoisalsoHonoraryPresidentofthePerdanaLeadershipFoundation.

12 DECEMBERImproving Human ResourcesTMsignedaMemorandumofUnderstanding(MoU)withtheDepartment of Skills Development (JPK) under the Ministryof Human Resources for the exchange of expertise andresources to empower the workforce at both organisations.TMwasrepresentedbyitsChiefHumanCapitalOfficer,MohdKhalisAbdulRahim,whileJPKwasrepresentedbyitsDirectorofSkillsDevelopment,DrPangChauLeong.

17 DECEMBERPromoting ICT among SMEsTM inked an agreement with Interbase Resources Sdn Bhdto promote the adoption of ICT by Malaysian SMEs and,especially, to manage their e-commerce business cost-effectively with the latest bundle of Lelong.my’s Web Storefeature in TM’s MARKETING Tools app. Azizi A Hadi, EVP ofSME,signedtheagreementonbehalfofTMwhileLelong.mywasrepresentedbyitsManagingDirector,RichardTan.

53



aWaRDS & ReCOGniTiOn 201212 JANUARYThe BrandLaureate Top Ten Masters Awards• TheMostPreferredBrandinICT–

Broadband

11 FEBRUARYNEF-Awani ICT Awards 2011• FavouriteTelecommunications

CompanyinPeople’sChoiceCategory

29 MARCHPC.Com 12th Readers Choice Awards 2011• BestWiredBroadbandforUniFi

12 APRILFrost & Sullivan Malaysia Excellence Awards, Kuala Lumpur• ServiceProvideroftheYear• BroadbandServiceProviderofthe

Year• DataCommunicationsService

ProvideroftheYear• ManagedServiceProviderofthe

Year

19 APRIL15th Annual Telecom Award, Bangkok• BestBroadbandCarrier

24 APRILPutra Brand Awards• SilverforCommunications

NetworkCategory

8 MAYPenyedia Perkhidmatan Internet, Kuala Lumpur• BestBrandinICT

7 JUNEFrost & Sullivan Asia Pacific ICT Award, Singapore• FixedBroadbandServiceProvider

oftheYear

14 JUNEUrbanscapes-MARKies Award• BestIdea–ConsumerEvents/

ExperientialTMEveryoneConnects

18 JUNE qS Asian University Rankings• MultimediaUniversity(MMU)the

highestrankedPrivateUniversityinMalaysia(MMU)

19 JUNEAsia Communications Award, Singapore• GiorgioMigliarina:Chief

TechnologyOfficeroftheYear

30 JUNEWorld HRD Congress and World Education Congress, Mumbai, India• ForTMTrainingCentre(TMTC):

– BestLearningProgramme(BestBehaviouralChange)

– BestPractices(Beste-LearningImplementationonaBudget)

11 JULYMalaysian Software Testing Board q-Merit Award• TMR&D

54




17-19 SEPTEMBERAsia Geospatial Forum, Hanoi, Vietnam• AsiaGeospatialExcellenceAward

forMERS999

24 SEPTEMBERComputerworld Reader’s Choice Awards • ManagedConnectivitycategory

25 SEPTEMBER11th Computerworld Malaysia Readers Choice Awards• GoldAward(VADS)

11 OCTOBERMalaysia HR Awards• EmployerofChoiceGoldAward

14 OCTOBERCustomer Relationship Management and Contact Centre Association of Malaysia (CCAM) Awards• 16awardsforVADS• VADStheBestoftheBestBPO

OutsourceroftheYear

24 OCTOBERMinistry of International Trade & Industry - Industry Excellence Award• MultimediaUniversity(MMU)

30 OCTOBERAnugerah Cemerlang Keselamatan dan Kesihatan Kebangsaan• WonbyTMPahang

1 NOVEMBERNational Annual Corporate Report Awards (NACRA)• SilverAward–OverallExcellence

forBestAnnualReport• IndustryExcellenceAwardforMain

BoardCompaniesundertheTrade&ServiceCategory

2 NOVEMBERContact Centre World Awards• 2Gold,2Silverand2Bronze

medals(VADS)

3 DECEMBERNational Center for Sustainability Reporting (NCSR), Jakarta• BestSustainabilityAwardfor

Malaysia

13 DECEMBERSMI Association of Malaysia SME Recognition Award • TheSahabat NegaraSMEAward

13 JULYContact Centre World Top Ranking Performers Award – APAC Region, Singapore• 5Gold,1Silverand4Individual

AwardsforVADSBerhad

19 JULY3rd CMO ASIA Awards for Excellence inBranding & Marketing• Asia’sBestBrandAward

8 AUGUSTGlobal Services 100 Provider• WinneroftheGlobalBPO

Challengerscategory–VADS(BPO)

31 AUGUSTContact Centre Association of Singapore Awards• BronzeforBestOutsourcedContact

Centre(VADS)

6 SEPTEMBERAlpha Southeast Asia’s Institutional Investor Corporate Awards for Malaysia• BestAnnualReport• Topthreefor:

- MostConsistentDividendPolicy- BestStrategicCSR

55



TM Past Awards

2010

2011 tHE BRaNDlaUREatE tOP tEN MastERs

aWaRDs• SMEs’MostPreferredBrandintheMedia

category–TMIM’sYellowPages

PC.COM 11tH PRODUCt aWaRDs • BestFixedBroadband

tHE BRaNDlaUREatE COUNtRY BRaNDiNG aWaRDs 2010-2011 – wonbyMenaraKualaLumpur

NEf-aWaNi iCt aWaRDs• FavouriteTelecommunicationsCompany2010

fROst & sUlliVaN MalaYsia ExCEllENCE aWaRDs• BroadbandServiceProvideroftheYear• DataCommunicationsServiceProviderofthe

Year• ManagedServiceProvideroftheYear• ManagedSecurityServiceProvideroftheYear–

VADSBerhad

REaDER’s DiGEst tRUstED BRaNDs aWaRDs • PlatinumAward–InternetBroadbandService• GoldAward–PhoneService

tHE BRaNDlaUREatE tOP tEN MastERs aWaRDs• Asia’sBestEmployerBrandAward• Asia’sBestBrandAward

MalaYsia 1000’s iNDUstRY ExCEllENCE aWaRD fOR COMPUtER PRODUCts• WonbyVADSBerhad

aCCa MalaYsia sUstaiNaBilitY REPORtiNG aWaRDs• ReportingonSocialPerformance

1st MEf CERtifiED sERViCE PROViDER iN MalaYsia

PiKOM 25tH aNNiVERsaRY Gala DiNNER & iCt lEaDERsHiP aWaRDs• ICTOrganisationExcellenceAward• ICTPersonalityoftheYear–Dato’Sri

ZamzamzairaniMohdIsa,GroupCEO

BEst WHOlEsalE EtHERNEt sERViCE aPaC

MalaYsiaN CORPORatE GOVERNaNCE (MCG) iNDEx aWaRDs• IndustryExcellenceinTelecommunications&

Media• BestCSR• Distinction(A+)

NatiONal aNNUal CORPORatE REPORt aWaRDs (NaCRa)• MostOutstandingAnnualReportoftheYear–

PlatinumAward• IndustryExcellenceAward–Trading&Services• BestCorporateSocialResponsibilityAward–

SilverAward• BestDesignedAnnualReport–SilverAward• BestAnnualReportinBahasaMalaysia–Silver

Award

AnugerAh PelAncongAn KebAngsAAn MAlAysiA 2008-2009 • Tarikan Pelancongan Terbaik – Tarikan Berinovasi

(Buatan Malaysia)

PC.COM aWaRD• BestFixedBroadband

12tH aNNUal CHiNEsE NEW YEaR (CNY) GREEtiNG aDVERtisEMENt aWaRDs• GrandPrize

staRBiZ-iCR MalaYsia CORPORatE REsPONsiBilitY (CR) aWaRDs 2009• CommunityCategory

PRiME MiNistER’s CsR aWaRDs 2009• BestWorkplacePractices

PUtRa BRaND aWaRDs• BestCommunicationNetwork

BRaNDlaUREatE tOP 10 MastERBRaND aWaRDs 2009-2010• CommunicationsCategory• BrandLaureateProductBranding–Media:Digital

Directory(YellowPages)

56




2009

REaDER’s DiGEst tRUstED BRaND• Streamyx–Platinum

laBOUR DaY CElEBRatiONs• Anugerah Majikan Prihatin

fROst & sUlliVaN MalaYsia tElECOMs aWaRDs• DataCommunicationsServiceProvideroftheYear• ManagedServiceProvideroftheYear

iNtERNatiONal iNVENtiON, iNNOVatiON aND tECHNOlOGY ExHiBitiON (itEx)• MostInnovativeProductsAward• ThreeGoldAwards• TwoSilverAwards• SixBronzeAwards

MalaYsiaN MEDia aWaRDs• AdvertiseroftheYear• ThreeGoldAwards• TwoSilverAwards• TwoBronzeAwards

asia HRD CONGREss• AwardforCompany’sHumanCapitalDevelopment

programmes

tOP RaNKiNG PERfORMERs aWaRDs aPaC REGiON fiNal• HighlyCommendedAward• GoldAward• SilverAward

10tH MalaYsia HR aWaRDs • HRExcellence–GoldAward

sHaRE GUiDE assOCiatiON MalaYsia (sGaM) 21st aNNUal CONfERENCE aND iCt aWaRDs• UnifiedCommunicationsExcellence

MalaYsiaN BUsiNEss-CiMa ENtERPRisE GOVERNaNCE aWaRDs• 1stRunner-UpOverall

COMPUtERWORlD REaDER’s CHOiCE aWaRDs• ManagedConnectivityServicesProvider

it iNsPiRatiON aWaRDs• CIOoftheYear• CIOoftheCIOs

PRiME MiNistER’s CsR aWaRDs• BestWorkplacePractices• HonourableMentionintheEnvironmentCategory

MAlAM PenghArgAAn JAlur lebAr 1MAlAysiA• Pakej Jalur Lebar Terbaik• Penglibatan Paling Aktif dalam Kembara Jalur

Lebar

MalaYsiaN CORPORatE GOVERNaNCE iNDEx aWaRDs• IndustryExcellence• BestConductofAnnualGeneralMeeting• CorporateGovernance

NATIONAL ANNUAL CORPORATE REPORT AWARDS (NACRA)• MostOutstandingReportoftheYear–GoldAward• IndustryExcellence–Trading&Services• BestCorporateSocialResponsibility–Platinum

Award• BestDesignedAnnualReport–GoldAward• BestAnnualReportinBahasaMalaysia–Silver

Award

tHE BRaNDlaUREatE aWaRDs 2008-2009 • BestBrands

HEWitt BEst EMPlOYERs• 10BestEmployersinMalaysia

fROst & sUlliVaN MalaYsia tElECOMs aWaRDs• DataCommunicationsServiceProviderofthe

Year• BroadbandServiceProvideroftheYear

REaDER’s DiGEst aWaRD • TrustedBrand–Platinum

MalaYsiaN assOCiatiON Of RisK aND iNsURaNCE MaNaGEMENt (MaRiM) aWaRD • RiskManagementAwardofExcellence

aBU asia-PaCifiC ROBOt CONtEst tOKYO – tOYOta aWaRD

57



TM Past Awards

MalaYsiaN BUsiNEss-CiMa ENtERPRisE GOVERNaNCE aWaRDs• 1stRunner-UpOverall• 1stRunner-UpCSRCategory

CONtaCtCENtERWORlD.COM aWaRD • BestContactCenter(250+Agents)

CisCO aWaRD• ManagedServicesPartneroftheYear(Revenue)

iNtERNatiONal BUsiNEss REViEW aWaRDs• ExcellenceintheTelecommunicationsSector

AnugerAh PelAncongAn libur• TheBestMonumentAward

NatiONal aNNUal CORPORatE REPORt aWaRDs (NaCRa)• IndustryExcellence–Trading&Services• MostOutstandingAnnualReportoftheYear–

Gold• OverallExcellence–Gold• BestCorporateResponsibility–Gold• BestAnnualReportinBahasaMalaysia–Gold

MalaYsiaN CORPORatE GOVERNaNCE iNDEx aWaRDs• Distinction• BestAGMConductedin2009

staRBiZ-iCRM CR aWaRDs• CommunityCategory

stRatEGiC PaRtNERsHiP & ENtREPRENEURsHiP DEVElOPMENt fOR iCMiC BUsiNEss aWaRD• FixedTelephoneLineCategory

fROst & sUlliVaN MalaYsia tElECOMs aWaRDs• BroadbandServiceProvideroftheYear• AlternativeServiceProvideroftheYear

MsC MalaYsia ‘CYBERCENtRE’• MenaraTMwasawardedMSCMalaysia

‘Cybercentre’status

MAlAM AnugerAh ceMerlAng KeselAMATAn DAn KesihATAn PeKerJAAn 2007• TMSarawak–GoldAward–Telecommunications

sector

tHE BRaNDlaUREatE aWaRDs 2007-2008• CorporateBrandinICT-ServiceProvidercategory

bytheAsiaPacificBrandsFoundation(APBF)

MalaYsiaN BUsiNEss-CiMa ENtERPRisE GOVERNaNCE aWaRDs• MeritAward• CorporateSocialResponsibilityCategorywinner

MalaYsia 1000 tOP tEN aWaRDs• TMreceivedrecognitionforitsoutstanding

financialperformance

staRBiZ-iCR MalaYsia CORPORatE REsPONsiBilitY aWaRDs• Workplacecategory

COMPUtERWORlD MalaYsia REaDERs CHOiCE aWaRDs• DataCentre&HostingServiceProviderAward• ManagedConnectivityServiceProviderAward

tHE tECHNOlOGY BUsiNEss REViEW asEaN aWaRDs• TelekomSales&ServicesSdnBhd(TSSSB),

asubsidiaryofTM,washonouredwiththeCorporateAwardforTelecommunicationsRetailServices

DeWAn bAhAsA DAn PusTAKA AnugerAh ciTrA WAngsA MAlAysiA 2007• Anugerah Citra Iklan Radio• Hadiah Galakan Industri Komunikasi & Multimedia

NatiONal aNNUal CORPORatE REPORt aWaRDs (NaCRa)• OverallExcellenceforthemostoutstanding

–GoldAward• IndustryExcellence–Trading&Services• BestDesignedAnnualReport–SilverAward• BestAnnualReportinBahasaMalaysia–Gold

Award• CorporateSocialResponsibilityReport–Silver

Award

2008

58




2007

CORPORatE GOVERNaNCE sURVEY 2008 aWaRD fROM tHE MiNORitY sHaREHOlDER WatCHDOG GROUP (MsWG)• TMwasnamedtheMostExcellentintheTrading/

ServicesSector• ThirdplaceforOverallExcellence

MUltiMEDia DEVElOPMENt CORPORatiON (MDEC)• TSSSBwasoneoftherecipientsofCapability

DevelopmentProgramme(CDP)SoftwareTesting

liBUR MaGaZiNE• MenaraKLwonTheBestMonumentAward

tHE BRaNDlaUREatE aWaRD 2006-2007• CorporateBrand

– TelecommunicationsIndustryCategory

PC.COM MaGaZiNE• MostPopularBroadbandInternetService

Provider• BestBroadbandInternetServiceProviderof2006

GsM GlOBal MOBilE aWaRDs• DialogTelekomPLC(Dialog)ofSriLanka

receivedaCommendationAwardfromtheGSMAssociation

laNKa MONtHlY DiGEst• DialogwontopspotintheFinanceBrandIndex

staNDaRD CHaRtERED-fiNaNCial ExPREss CsR aWaRD 2006• WonbyTMInternationalBangladeshLtd

fROst & sUlliVaN MalaYsia tElECOMs aWaRDs• ServiceProvideroftheYear• DataCommunicationsServiceProviderof

theYear• BroadbandServiceProvideroftheYear-wonby

TMNet

REaDER’s DiGEst tRUstED BRaNDs sURVEY• TrustedBrandinTelecommunications–Platinum

Award

tM R&D iNtERNatiONal iNVENtiON, iNNOVatiON, iNDUstRial DEsiGN aND tECHNOlOGY ExHiBitiON (i-tEx)• PlatformforAll-ServiceMulti-AccessorPLASMA

–GoldAward&InnovativeProductAward• XtreamXHomeMediaCentre–GoldAward• VerticalCavitySurfaceEmittingLaserorVCSEL–

GoldAward• AdvancedTrackingSystemUsingRFID–Silver

Award&InnovativeProductAward• EDFAIn-Line–SilverAward• Simple&EfficientSoftwareRadioDevelopment

Platform–BronzeAward• DistributionPointorDP–InnovativeProduct

Award

MalaYsia BRaND EQUitY aWaRD• Celcomwon4thplaceforBrandVisibility

fROst & sUlliVaN asia PaCifiC iCt aWaRDs• ServiceProvideroftheYear

aDasia• TM’s2007ChineseNewYearTVCommerical

(TVC)receivedtheSilver-PhoenixAwardforCinematography

CUstOMER RElatiONsHiP ExCEllENCE (CRE) aWaRDs – asia PaCifiC CUstOMER sERViCE CONsORtiUM (aPCsC)• DialogwontheOutstandingAchievementin

CustomerRelationshipExcellence

MOst aDMiRED KNOWlEDGE ENtERPRisE (MaKE) aWaRD• WonbyPTExcelcomindoPratamaTbk(XL)

assOCiatiON Of CHaRtERED CERtifiED aCCOUNtaNts (aCCa)• TMreceivedthePlatinumforTrainee

Development–ApprovedEmployerProgramme

DeWAn bAhAsA DAn PusTAKA – AnugerAh ciTrA WAngsA MAlAysiA 2006• Celcom(M)BerhademergedtheGrandPrize

Winner–TelecommunicationsCategory

59



TM Past Awards

2006

UNi-aPRO OUtstaNDiNG EMPlOYEE-PaRtNER aWaRD• TMwasoneoffiveregionalcompaniestoreceivethe

award

RED HERRiNG asia tOP 100 tECHNOlOGY COMPaNiEs aWaRD• WonbyAogosNetworkSdnBhd,astart-upcompany

nurturedbytheMultimediaUniversity

BEst OUtsOURCED sERViCE CONtaCt CENtRE assOCiatiON Of MalaYsia (CCaM)• GoldAward–CelcomCustomerPremierServiceTeam• BronzeAward–TMNetCustomerInteractionCentre

ManagementTeamAdditionally,VADSsecuredfiveindividualachievements:• BestContactCentreManager–BronzeandGold

Awards• BestContactCentreTeamLeader–SilverAward• BestContactCentreProfessionalOutsourced–Gold

andBronzeAwards

MiNistER Of ENERGY, WatER aND COMMUNiCatiONs, MalaYsia• CelcomwasawardedtheAnugerah Program Time 2:

Syarikat Pemberi Perkhidmatan Terbaik

sixtH OsKaR aWaRDs 2007 – filM WORKERs assOCiatiON Of MalaYsia• BestCinematographyforTMMerdekaTVC• BestTVCforTMChineseNewYearadvertisement

MalaYsia’s MOst ValUaBlE BRaNDs • Celcomsecuredfifthplace

CORPORatE GOVERNaNCE sURVEY REPORt • TMwasrankedsecond

NatiONal aNNUal CORPORatE REPORt aWaRDs (NaCRa) • OverallExcellence–GoldAward• IndustryExcellence–Trading&Servicessector• BestDesignedAnnualReport–GoldAward

PiKOM iCt sERViCE PROViDER Of tHE YEaR aWaRD• WonbyVADSBerhad

NatiONal aWaRD fOR MaNaGEMENt aCCOUNtiNG (NafMa) ExCEllENCE aWaRD

PC.COM MaGaZiNEtM Net Won:• BestWiFiHotspotOperatorof2005• BroadbandInternetServiceProviderof2005• MostPopularBroadbandInternetService

Provider

tHE assOCiatiON Of CHaRtERED CERtifiED aCCOUNtaNts (aCCa)• CommendationforSocialReportinginanAnnual

Report–GoldAward

REaDER’s DiGEst tRUstED BRaNDs aWaRD • Platinum–TelecomCompanyCategory

tHE REaDER’s DiGEst tRUstED BRaNDs aWaRD• MobileServiceProviderCategory–GoldAward

fROst & sUlliVaN MalaYsia tElECOMs aWaRDs• ServiceProvideroftheYear• DataCommunicationsServiceProviderofthe

Year

CORPORatE GOVERNaNCE sURVEY 2005 aWaRD fROM tHE MiNORitY sHaREHOlDER WatCHDOG GROUP (MsWG)

iNtERNatiONal iNVENtiON iNNOVatiON iNDUstRial DEsiGN & tECHNOlOGY ExHiBitiON (i-tEx) aWaRD TelekomResearch&Development(TMR&D)wonfourawards:• KenalMuka–GoldAward• XstreamXP2P–GoldAward• InnovativeProductAward• GeniusPrizeBudapestTMR&DalsowontheBronzeAwardfortwoproducts–theEPONNetworkSolutionandMicroProbes

MalaYsiaN BUsiNEss MaGaZiNE• SecondRunner-UpintheMalaysianBusiness

CorporateGovernanceAward2005

AnugerAh PerKhiDMATAn KAunTer TerbAiK fOR 2005 – MiNistRY Of ENERGY, WatER aND COMMUNiCatiONs• WonbyTMpointinAlorStar,Kedah

60




2005

NatiONal aNNUal CORPORatE REPORt aWaRDs (NaCRa)• OverallExcellenceAwardfortheMost

OutstandingAnnualReport• IndustryExcellence–Trading&Servicessector

forthe10thconsecutivetime• BestDesignedAnnualReport–GoldAward• BestAnnualReportinBahasaMalaysia–Silver

Award

tHE BRaND laUREatE aWaRDs 2006-2007• CorporateBrand–TelecommunicationsIndustry

categorybytheAsiaPacificBrandsFoundation(APBF)

tElEliNK tElECOMMUNiCatiON aWaRD• BestMobileServiceProviderinBangladesh,won

byAKTEL

JfB PERfORMaNCE aWaRD• WonbyAKTEL• AKTELalsowonintheBestAdvertisementAward

Category

GsM GlOBal MOBilE aWaRDs• CommendationAwardwonbyDialogTelekom,Sri

Lanka

DeWAn bAhAsA DAn PusTAKA AnugerAh ciTrA WAngsA• Anugerah Citra Iklan Radio wonbyCelcom

GsM assOCiatiON aWaRDs• BestBroadcastCommercialAwardwonbyTM

RegionalCompany-M1

MAlAM AnugerAh KuAliTi yb MenTeri TenAgA, Air DAn KoMuniKAsi TAhun 2004• Hadiah Utama Anugerah Kualiti YB Menteri Tenaga,

Air dan Komunikasi 2004wonbyKedaiTelekomPelangi,JohorBahru

• ExcellentCustomerServiceCounterwonbyCelcom’sBandarBaruKlangBranchandTMNetClickersinKelanaJayaParkView

asiaMONEY MalaYsia’s BEst aNNUal aWaRD CEREMONY• OverallBestCorporateGovernanceAward• MostImprovedManagementPracticeAward• MostImprovedInvestorRelationsAward• RegionalDealsoftheYearAward

aCCa MalaYsia ENViRONMENtal aND sOCial REPORtiNG aWaRDs 2004• CommendedforSocialCorporateReportingin

AnnualReport

EUROMONEY MaGaZiNE• AsianDealsoftheYear• Asia’sBestManagedCompanies

fROst & sUlliVaN aWaRD• DataCommunicationsServiceProviderCategory• BroadbandServiceProviderCategory-wonby

TMNet

iNNOVatiVE lEaRNiNG & DEVElOPMENt aWaRD 2004• WonbyTMR&D

MalaYsiaN BOOK Of RECORDs• Malaysia’shighestaltitudepublicpayphoneat

3,661.81metresabovesealevel–installedatSayat-SayatGunungKinabalu

16tH iNtERNatiONal iNVENtiON iNNOVatiON iNDUstRial DEsiGN & tECHNOlOGY ExHiBitiON (i-tEx) aWaRDs• HandwrittenSignatureVerificationKENALSIGN–

GoldAward• VoIP-basedCommunicationsApplications(Simes

Network)–BronzeAward• I-TEXIndustryDesign–GoldAward• I-TEXIndustryDesign–BronzeAward

iNtERNatiONal REal EstatE fEDERatiON (fiaBCi) PRix D’ExCEllENCE• BestoftheWorldOffice/IndustryCategorywonby

MenaraTM

aRtHaKaNta BUsiNEss MaGaZiNE• ArthakantaBusinessAwardforMostOutstanding

CompanywonbyAKTEL

61



TM Past Awards

2004

2003

iBM aWaRDs• IBMPlatinumClubAward• IBMStrategicWinAward

MiCROsOft iMaGiNE CUP MalaYsia – sOftWaRE DEsiGN CHallENGE• Top3prizeswonbyMultimediaUniversity

BEst PRaCtiCEs COMPEtitiON Of ENERGY EffiCiENt BUilDiNGs ORGaNisED BY asEaN ENERGY EffiCiENCY aND CONsERVatiON• NewandExistingBuildingCategory–2ndplace

BEst iNtERNal aUDit PRaCtiCE aWaRD (BiaPa)• CompanywithShareholdersEquityofmorethan

RM200million

asEaN COMMUNiCatiONs ExPO aND fORUM• BestBoothDesignAward

CisCO BEst MaNaGED sERViCEs PaRtNER aWaRD fOR MalaYsia• WonbyVADS

NatiONal aNNUal CORPORatE REPORt aWaRDs (NaCRa) • IndustryExcellenceAwardforTradingand

Services–9thyear• BestDesignedAnnualReport–3rdyear

10 aWaRDs WON BY tM REGiONal COMPaNY – aKtEl:• BestOperatorforProductInnovationand

Technology2005bytheIndonesianAssociationPress

• MostReference-ableCustomerServices2004bySAPIndonesia

• FavouriteInnovativeMarketing2004bySelularMagazine

• Top10,BestInvestorRelations2004and2005byFinanceAsia

MAJlis PerAsMiAn sAMbuTAn hAri KAsTAM seDuniA XXii BY tHE MalaYsiaN ROYal CUstOMs• LargestPaymasterofServiceTaxesAward

CHiNa PREss aND tHE NaNYaNG siaNG PaU• AwardforCorporateChineseNewYear

Advertisement

REaDER’s DiGEst• Superbrands–GoldAward

sUPERBRaNDs MalaYsia MaGaZiNE• Superbrandsoftheyear(Telecommunications

Industry)–GoldAward

CisCO sYstEMs• SilverCertification

tHE iNstitUtE Of iNtERNal aUDitORs MalaYsia (iia MalaYsia)• IndustryExcellenceAwardforTradingand

Services–8thyear• BestDesignedAnnualReport–2ndyear

COMPUtERWORlD MaGaZiNE – CORPORatE BROaDBaND sERViCE REaDERs CHOiCE aWaRD• WonbyTMNet

iNtERNatiONal aRCH Of EUROPE aWaRD• PlatinumAwardbyTelekomNetworksMalawi

Limited(TNM)

GsM aWaRD fOR BEst UsE Of WiRElEss fOR EMERGENCY sitUatiONs• WonbyMTNNetworksPvtLtd,TelekomMalaysia

subsidiaryinSriLanka

HEWitt assOCiatEs sURVEY CONDUCtED iN assOCiatiON WitH tHE asiaN Wall stREEt JOURNal aND tHE faR EastERN ECONOMiC REViEW• 9thamongtheTop20BestEmployersinAsia• 3rdamongtheTop10EmployersinMalaysia

62




2002

laUNCH Of tHE MalaYsia 1,000 DiRECtORY• LeaderinTelecommunicationsSector• MostImprovedCompanybyAbsoluteIncreasein

ProfitAwards

NatiONal aNNUal CORPORatE REPORt aWaRDs (NaCRa)• IndustryExcellenceAward

–Trading&Services• BestDesignedAnnualReportAward

DeWAn bAhAsA DAn PusTAKA AnugerAh ciTrA iKlAn• BillboardAdvertisementGood2Talk

PUsPaKOM (PUsat PEMERiKsaaN KENDERaaN BERKOMPUtER sDN BHD)• Anugerah Emas Juara Keseluruhan

– WonbyTMFacilitiesSdnBhd

MAJlis PerAsMiAn sAMbuTAn hAri KAsTAM seDuniA XXii BY tHE MalaYsiaN ROYal CUstOMs• LargestPaymasterofServiceTaxesAward

AnugerAh KuAliTi MenTeri TenAgA KoMuniKAsi & MulTiMeDiA• BestCustomerServiceAward

– WonbyCelcom,JalanAmpangbranch

sAMbuTAn hAri KAsTAM seDuniA Ke-20 BY tHE MalaYsiaN ROYal CUstOMs• HighestServiceTaxPayer

GsM WORlD aWaRDs• WonbyMTNNetwork

DeWAn bAhAsA DAn PusTAKA AnugerAh ciTrA WAngsA• MostOutstandingAwardforthePrivateSector

AnnualReport2001

NatiONal aNNUal CORPORatE REPORt aWaRDs (NaCRa) • IndustryExcellenceAwardforTradingand

Services• BestAnnualReportinBahasaMalaysia

GsM assOCiatiON WORlD aWaRD• WonbyMTNNetworks

– subsidiaryofTelekomMalaysiainSriLanka

NatiONal aNNUal CORPORatE REPORt aWaRDs (NaCRa)• IndustryExcellenceAwardforTradingand


DeWAn bAhAsA DAn PusTAKA AnugerAh ciTrAlAPorAn TAhunAn seKTor sWAsTA• MostOutstandingAnnualReportAward• BillboardAdvertisementGood2Talk

– SpecialJuryAward• TVAdvertisement

– Jury&GrandAward

NatiONal aNNUal CORPORatE REPORt aWaRDs (NaCRa)• IndustryExcellenceAwardforTradingand


DeWAn bAhAsA DAn PusTAKA AnugerAh ciTrAlAPorAn TAhunAn seKTor sWAsTA• TVAdvertisementAmazingTelekom

– MostOustandingAward• TVAdvertisementTunaikanZakatFitrah

– SpecialJuryAward• AnnualReport

– SpecialJuryAward

KlsE CORPORatE sECtOR aWaRD• MainBoardTradingandServicesCategory

2000

2001

63



as at 20 March 2013

BOARD OF DIRECTORS

Dato’ Sri Dr Halim ShafieChairmanNon-IndependentNon-ExecutiveDirector

Dato’ Sri Zamzamzairani Mohd IsaManagingDirector/GroupChiefExecutiveOfficerNon-IndependentExecutiveDirector

Datuk Bazlan OsmanExecutiveDirector/GroupChiefFinancialOfficerNon-IndependentExecutiveDirector

Dato’ Fauziah YaacobNon-IndependentNon-ExecutiveDirector

Tunku Dato’ Mahmood Fawzy Tunku MuhiyiddinNon-IndependentNon-ExecutiveDirector

Dato’ Danapalan T.P VinggrasalamSeniorIndependentNon-ExecutiveDirector

quah Poh KeatIndependentNon-ExecutiveDirector

Datuk Zalekha HassanIndependentNon-ExecutiveDirector

Dato’ Ir Abdul Rahim Abu BakarIndependentNon-ExecutiveDirector

YB Datuk Nur Jazlan Tan Sri MohamedIndependentNon-ExecutiveDirector

Ibrahim MarsidiIndependentNon-ExecutiveDirector

Davide Giacomo Benello @ David BenelloIndependentNon-ExecutiveDirector

Eshah Meor SuleimanAlternateDirectortoDato’FauziahYaacobNon-IndependentNon-ExecutiveAlternateDirector

Nik Rizal Kamil Tan Sri Nik Ibrahim KamilAlternateDirectortoTunkuDato’MahmoodFawzyTunkuMuhiyiddinNon-IndependentNon-ExecutiveAlternateDirector

CORPORaTe inFORMaTiOn

64




SENIOR INDEPENDENT DIRECTORDato’DanapalanT.PVinggrasalamEmail:[email protected]

HEAD OFFICEMenaraTMJalanPantaiBaharu50672KualaLumpurMalaysia

Tel : 603-22409494Website:www.tm.com.my

STOCK ExCHANGE LISTINGListedontheMainMarketofBursaMalaysiaSecuritiesBerhadListingDate : 7November1990StockName : TMStockCode : 4863StockSector: Trading/Services

SHARE REGISTRARSTricorInvestorServicesSdnBhd(CompanyNo.118401-V)Level17,TheGardensNorthTowerMidValleyCity,LingkaranSyedPutra59200KualaLumpurMalaysia

Tel : 603-22643883Fax :603-22821886Website:www.tricorglobal.comEmail : [email protected]

AUDITORSPricewaterhouseCoopers(AF:1146)Level10,1Sentral,JalanTraversKualaLumpurSentral50470KualaLumpurMalaysia

Tel : 603-21731188Fax :603-21731288Website:www.pwc.com

PRINCIPAL BANKERS• CIMBBankBerhad• MalayanBankingBerhad

COMPANY SECRETARIESIdrusIsmail(LS0008400)

HamizahAbidin(LS0007096)

ZaitonAhmad(MAICSA7011681)

CONTACT USForanyenquiriesonTM• Email:[email protected]

maycall:– 100,ifyouareinMalaysia.– 1300888123ifyouarecalling

frommobile.– 603-22411290ifyouarecalling

fromoverseas.– 603-22409494toreachour

generallineatMenaraTM KualaLumpur.

• FollowTMonTwitter:@TMCorp(www.twitter.com/tmcorp)

ForanyenquiriesonUniFi,pleasecall:– 1300881221

(ForCurrentSubscribers)– 1300881222

(PreSales/Subcription)

REGISTERED OFFICELevel51,NorthWingMenaraTMJalanPantaiBaharu50672KualaLumpurMalaysia

Tel : 603-22401221Fax :603-22832415

65



Contact Us

1. HEAD OF INVESTOR RELATIONSRohailaMohamedBasirAged37,RohailaisresponsibleforinvestorrelationsandreportingtotheExecutiveDirector/Group Chief Financial Officer. She graduated with a LLB (Hons.) fromthe University of Malaya in 1999. She spent five years in private legal practicespecialising in banking and corporate finance prior to joining Malaysian AirlineSystemBerhadin2004,wheresheservedasGeneralCounseluntil2008.ShethenjoinedMMCCorporationBerhadasLegalAdvisorandlatermovedontobeSeniorManager,GroupManagingDirector’sOfficein2009,wheresheheadedthecorporatecommunicationsfunctionandhandledinvestorrelationsforthecompany.ShejoinedTMasGeneralManager(GM),InvestorRelationsinFebruary2011.

Tel : 603-22404848Fax :603-22400433Email : [email protected]

2. CHIEF INTERNAL AUDITORHazimiKassimResponsible for management of internal control and review of its effectiveness,adequacyandintegrity.Profileasdisclosedonpage86ofthisannualreport.

Tel : 603-22401919Fax : 603-79556235Email : [email protected]

3. CHIEF LEGAL, COMPLIANCE AND COMPANY SECRETARYIdrusIsmailResponsible for legal, compliance and company secretarial matters. Profile asdisclosedonpage85ofthisannualreport.


1. 2. 3.

66




4. 5.

4. CHIEF CORPORATE & REGULATORY OFFICERAhmadIsmailResponsiblefortheGroup’scorporateandregulatorymatters.Profileasdisclosedonpage86ofthisannualreport.

Tel :603-22415799Fax :603-22415769Email : [email protected]

5. VICE PRESIDENT, CUSTOMER SERVICE MANAGEMENTSalmahMohdTaufekAged 50, Salmah is responsible for customer service management. She obtainedaBSc inElectricalEngineeringfromtheUniversityofMissouri-Columbia,USA, in1984. She joined TM in 1985 as an Assistant Manager of Human Capital and hasheldvariouspositionsinher28yearsatTM.InSeptember2001,shewasappointedas State GM, Melaka and in 2002 as GM of Product Consultancy & ProgrammeManagementinDataProductServicesDivision.InJune2004,sheheadedtheSalesDivisionofTMWholesale,overseeingTMDomesticCarrierServicesandTMGlobalServicesuntilSeptember2006.ShewasthenassignedasStateGM,NegeriSembilanuntil June 2012 before being appointed to her current position as Vice President,CustomerServiceManagementon1July2012.


67



Group Corporate Structureasat20March2013

ThischartpresentsTM’ssubsidiaries*,associates,businesssupportandcorporatefunctions

Legend:

• LineofBusiness

• SupportBusinessandCorporateFunctions

• TMSubsidiary

* ListofTMGroupofCompaniesareshownonpages375to379ofthisAnnualReport# BusinessSupport

CONSUMER

• Telekom Sales & Services Sdn Bhd (100.0%)

SMALL MEDIUM ENTERPRISE (SME)

NEW MEDIA

• TM Net Sdn Bhd (100.0%)• TM Info-Media Sdn Bhd (100.0%)

ENTERPRISE

VaDs BERHaD

• VADS Business Process Sdn Bhd (100.0%)o PT VADS Indonesia (100.0%)

(90.0% owned by VADS Business Process Sdn Bhd; and 10.0% owned by VADS Berhad)

• VADS Professional Services Sdn Bhd (100.0%)• VADS Solutions Sdn Bhd (100.0%)• VADS e-Services Sdn Bhd (100.0%)• Meganet Communications Sdn Bhd (100.0%)

GOVERNMENT

• GITN Sdn Bhd (100.0%)

68




GLOBAL & WHOLESALE

WHOlEsalE

• Fiberail Sdn Bhd (54.0%)• Fibrecomm Network (M) Sdn Bhd (51.0%)

GlOBal

• Telekom Malaysia (USA) Inc (100.0%)• Telekom Malaysia (UK) Limited (100.0%)• Telekom Malaysia (Hong Kong) Limited (100.0%)• Telekom Malaysia (S) Pte Ltd (100.0%)

SUPPORT BUSINESS

• TM Facilities Sdn Bhd (100.0%) – TMF Autolease Sdn Bhd (100.0%)• Menara Kuala Lumpur Sdn Bhd (100.0%)• Telekom Multi-Media Sdn Bhd (100.0%) – Mutiara.Com Sdn Bhd (30.0%)• Universiti Telekom Sdn Bhd (100.0%) – Unitele Multimedia Sdn Bhd (100.0%)

• MMU Creativista Sdn Bhd (100.0%) – Multimedia College Sdn Bhd (100.0%)• Mobikom Sdn Bhd (100.0%)• Property Management#

• Property Operations#

• Security Management#

CORPORATE CENTRE

IT & NETWORK TECHNOLOGY#

• Telekom Research & Development Sdn Bhd (100.0%)

GROUP BUSINESS &CUSTOMER MANAGEMENT#

• Telekom Applied Business Sdn Bhd (100.0%)

69



Group Organisation Structureasat20February2013

BOaRD Of DiRECtORs

GROUP CHiEf ExECUtiVE OffiCER

Chief internal auditor

BOaRD aUDit COMMittEE

Chief legal, Compliance &

Company secretary

ChiefStrategyOfficer

ExecutiveVicePresidentConsumer/ChiefExecutiveOfficerTSSSB

ExecutiveVicePresidentTMSME

ExecutiveVicePresidentTMEnterprise

ExecutiveVicePresidentTMGovernment

ExecutiveVicePresidentNewMedia/ChiefExecutiveOfficerTMNet

ChiefExecutiveOfficerVADS

ExecutiveDirector/GroupFinancialOfficer

ChiefTechnology&InnovationOfficer

ExecutiveVicePresidentTMGlobal&Wholesale

ChiefCorporate&RegulatoryOfficer

VicePresidentSupportBusiness

ChiefProcurementOfficer

ChiefHumanCapitalOfficer

ChiefMarketingOfficer

VicePresidentGroupCorporateCommunications

70




trust72 BoardofDirectors74 ProfileofDirectors82 GroupLeadershipTeam84 ProfileofManagementTeam90 StatementonCorporateGovernance112 DirectorsStatementonRiskManagement&InternalControl121 AuditCommitteeReport128 StatementonInternalAudit132 BoardRiskCommitteeReport136 BusinessContinuityManagement(BCM)Report139 AdditionalComplianceInformation143 CorporateIntegrity

Leadership & Accountability

Led by intuitive leadership, we are committed to upholding the principles of good governance and integrity in all aspects of our business dealings. In our pursuit of performance excellence, driven by creativity and passion, we are here to make a difference, by doing the right things for our customers, people, stakeholders and the nation.

Seated from right to left

Dato’ sri Dr Halim shafieChairmanNon-IndependentNon-ExecutiveDirector

Datuk Zalekha HassanIndependentNon-ExecutiveDirector

Datuk Bazlan OsmanExecutiveDirector/GroupChiefFinancialOfficerNon-IndependentExecutiveDirector

BOaRD OFDiReCTORS

Standing from right to left

idrus ismailCompanySecretary

Nik Rizal Kamil tan sri Nik ibrahim KamilNon-IndependentNon-ExecutiveAlternateDirector

tunku Dato’ Mahmood fawzy tunku MuhiyiddinNon-IndependentNon-ExecutiveDirector

Dato’ ir abdul Rahim abu BakarIndependentNon-ExecutiveDirector

YB Datuk Nur Jazlan tan sri MohamedIndependentNon-ExecutiveDirector

Zaiton ahmadJointSecretary

72


Leadershipwww.tm.com.my


Seated from right to left

Dato’ sri Zamzamzairani Mohd isaManagingDirector/GroupChiefExecutiveOfficerNon-IndependentExecutiveDirector

Dato’ fauziah YaacobNon-IndependentNon-ExecutiveDirector

Standing from right to left

Hamizah abidinJointSecretary

Dato’ Danapalan t.P VinggrasalamSeniorIndependentNon-ExecutiveDirector

ibrahim MarsidiIndependentNon-ExecutiveDirector

Quah Poh KeatIndependentNon-ExecutiveDirector

David BenelloIndependentNon-ExecutiveDirector

Eshah Meor suleimanNon-IndependentNon-ExecutiveAlternateDirector

73


Leadership www.tm.com.my

PROFiLe OFDiReCTORS

DATO’ SRI DR HALIM SHAFIEChairmanNon-IndependentNon-ExecutiveDirector

Dato’ Sri Dr Halim, aged 64, a Malaysian, was appointed Non-IndependentNon-ExecutiveChairmanofTMon31July2009.Hisacademic qualifications include Bachelor of Economics (Hons),UniversityofMalaya (1972),Masters inEconomicDevelopment,UniversityofPittsburgh(1980)andPh.DinInformationTransfer,Syracuse University (1988). He also completed professionalcoursesinSystemsAnalysisandDesignattheNationalInstituteofPublicAdministration(INTAN)(1976),ManagementEducationProgramme, Indian InstituteofManagement,Ahmedabad, India(1977) and Advanced Management Program, Harvard BusinessSchool(2000).

HehasservedinmanyGovernmentagenciesincludingMinistryof Education, Malaysian Administrative Modernisation andManagement Planning Unit (MAMPU) in the Prime Minister’sDepartmentandasDirectorofINTAN.HewasDeputySecretaryGeneral 1, Communications and Multimedia Sector in 1999,SecretaryGeneral,MinistryofEnergy,WaterandCommunicationsin 2000, and Chairman of the Malaysian Communications andMultimediaCommission(MCMC)fromApril2006toMay2009.

Overthelast16years,hehasservedonmanyboards,includingTenaga Nasional Berhad, Pos Malaysia Berhad and MultimediaDevelopmentCorporationSdnBhd.HeiscurrentlytheChairmanofUniversitiTelekomSdnBhd,MenaraKualaLumpurSdnBhdand GITN Sdn Bhd, wholly-owned subsidiaries of TM. He alsoholds office as Adjunct Professor of Universiti Utara Malaysia,Advisory Board Chairman of the National Library, and a boardmember of Malaysian Electronic Clearing Corporation Sdn Bhd(asubsidiaryofBankNegaraMalaysia)andMalaysianIndustry-Government Group for High Technology (MIGHT). Dato’ Sri DrHalimcomplieswithParagraph15.06oftheMainMarketListingRequirements(MainLR)ofBursaMalaysiaSecuritiesBerhadontherestrictiononnumberofdirectorshipsinlistedissuerswithonedirectorshipinalistedissuer,ieTM.

HecurrentlyservesasChairmanofTM’sBoardDisputeResolutionCommittee (BDRC). He is a Non-Executive Director nominatedby theMinisterofFinance, Incorporated (MoF Inc.), theSpecialShareholderofTMandhasneverbeenchargedforanyoffencewithinthepast10years.HehasnofamilyrelationshipwithanyDirectororMajorShareholderoftheCompanynoranyconflictofinterestwiththeCompany.

74




DATO’ SRI ZAMZAMZAIRANI MOHD ISAManagingDirector/GroupChiefExecutiveOfficerNon-IndependentExecutiveDirector

Dato’ Sri Zamzamzairani, aged 52, a Malaysian, was appointedNon-Independent Executive Director and Managing Director/Group Chief Executive Officer, TM on 25 April 2008. He holdsa Bachelor of Science in Communications Engineering fromPlymouthPolytechnic,UnitedKingdom(UK)andhascompletedtheCorporateFinance,StrategiesforCreatingShareholderValueprogramme at Kellog School of Management, NorthwesternUniversity,USA.

His vast experience in the telecommunications industry spansmorethan28years.Dato’SriZamzamzairani’scareerstartedinTMwhereheservedfor13years,beforeassumingkeypositionsinseveralmultinationals,suchasGlobalOneandthenatLucentTechnologies (Malaysia) as its Chief Executive Officer. In 2005,hereturnedtoTMasSeniorVicePresident,GroupStrategyandTechnology and thereafter as Chief Executive Officer, MalaysiaBusiness,beforebeingappointedtohiscurrentoffice.

Dato’ Sri Zamzamzairani is also a Director of a number of TMsubsidiaries including Chairman of VADS Berhad and TM NetSdn Bhd and Deputy Chairman of GITN Sdn Bhd. Under hisleadership,TMhassuccessfullyrolledoutandlaunchedthehighspeed broadband service in a historical collaboration with theGovernmentofMalaysia.

Dato’ Sri Zamzamzairani complies with Paragraph 15.06 oftheMainLRwithonedirectorshipinalistedissuer,ieTM.

AstheGroupCEO,healsositsontheBoardTenderCommittee(BTC)ofTM.He isanExecutiveDirectornominatedbytheMoFInc.,theSpecialShareholderofTM.Hehasneverbeenchargedforanyoffencewithinthepast10yearsandhasnofamilyrelationshipwithanyDirectororMajorShareholderoftheCompanynoranyconflictofinterestwiththeCompany.

75



Profile of Directors

DATUK BAZLAN OSMANExecutiveDirector/GroupChiefFinancialOfficerNon-IndependentExecutiveDirector

Datuk Bazlan, aged 49, a Malaysian, was appointedNon-IndependentExecutiveDirectorofTMon25April2008.HeisalsotheGroupChiefFinancialOfficer(CFO)ofTM,thepositionheassumedsince1May2005.HeisaFellowoftheAssociationofCharteredCertifiedAccountants (ACCA),UKandaCharteredAccountantoftheMalaysianInstituteofAccountants(MIA).

HebeganhiscareerasanauditorwithMessrsHanafiahRaslanMohamad, a public accounting firm, in 1986 and subsequentlyservedtheSimeDarbyGroup,holdingvariousfinancepositionsinitscorporateofficesinKualaLumpur,SingaporeandMelaka.In1993,hehadastintwithAmericanExpressMalaysiaBerhadbefore joining Kumpulan FIMA Berhad in 1994, where he wassubsequentlyappointedSeniorVicePresident,Finance/CompanySecretary. He joined Celcom Axiata Berhad in 2001 as theSeniorVicePresident,CorporateFinanceandTreasuryandwassubsequentlyappointedtheCFOin2002priortohisappointmentas TM Group CFO in 2005. He also oversees the operations ofGlobal & Wholesale businesses and Support Business. DatukBazlansitsontheBoardsofseveralsubsidiarieswithinTMGroupincluding VADS Berhad and Universiti Telekom Sdn Bhd. He isalsoChairmanofFiberailSdnBhdandTMInfo-MediaSdnBhd.DatukBazlancomplieswithParagraph15.06oftheMainLRwithonedirectorshipinalistedissuer,ieTM.

He is a member of TM’s BTC, Board Risk Committee (BRC),BoardInvestmentCommittee(BIC)andBDRC.HeisanExecutiveDirectornominatedby theMoF Inc., theSpecialShareholderofTM.Hehasneverbeenchargedforanyoffencewithinthepast10yearsandhasnofamilyrelationshipwithanyDirectororMajorShareholderoftheCompanynoranyconflictofinterestwiththeCompany.

DATO’ FAUZIAH YAACOBNon-IndependentNon-ExecutiveDirector

Dato’ Fauziah, aged 57, a Malaysian, was appointedNon-IndependentNon-ExecutiveDirectoron4March2013.Shegraduated with a Bachelor of Arts (Hons) in 1978 and Diplomain Education in 1980, both from the University of Malaya. SheobtainedaDiplomainPublicAdministrationfromINTANin1981and lateraDiploma inAdministrativeStudiesandaMasters inPublicAdministration,bothfromtheUniversityofLiverpool,UKin1988and1989respectively.Dato’ Fauziah began her career in the civil service in 1981 asan Assistant Secretary in the Ministry of Education and wasappointedPrincipalAssistantSecretaryinthesameministryfrom1986until1987.ShelaterpursuedherstudiesintheUKanduponherreturnin1989,servedasAssistantSecretaryintheMinistryofFinance(MOF)until1992.ShewasthenpostedtotheMinistryofTransportasAssistantDirectorfortwoyearsandlaterassignedtoKualaLumpurInternationalAirportBerhadasSeniorManagerfrom1993until1999.Dato’FauziahreturnedtoMOFin1999andwasappointedPrincipalAssistantDirectorintheBudgetDivisionuntil2006andsince thenhasserved invariousdepartments intheMOFbeforebeingappointedtohercurrentpositionasDeputySecretaryGeneral(Systems&Controls)on16November2012.

Dato’ Fauziah is a director of several companies and agenciesrelated to the Government, namely Intellectual PropertyCorporation of Malaysia (MyIPO), Penang Port Sdn Bhd andMSCMSCorporateServicesSdnBhd(MyPOWER).ShecomplieswithParagraph15.06of theMainLRwithonedirectorship inalistedissuer,ieTM.

Dato’ Fauziah is currently a member of the BTC and BIC ofTM. She has never been charged for any offence within thepast10yearsandhasnofamilyrelationshipwithanyDirectororMajor Shareholder of the Company nor any conflict of interestwiththeCompany.

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DATO’ DANAPALAN T.P VINGGRASALAMSeniorIndependentNon-ExecutiveDirector

TUNKU DATO’ MAHMOOD FAWZY TUNKU MUHIYIDDINNon-IndependentNon-ExecutiveDirector

Tunku Dato’ Mahmood Fawzy,aged54,aMalaysian,wasappointedNon-Independent Non-Executive Director of TM on 25 April 2008.He holds a Bachelor of Arts (Hons) in Business Studies from thePolytechnic of Central London (now Westminster University), aMastersinBusinessAdministrationfromWarwickUniversity,UK,anda Diploma in Marketing from the Chartered Institute of Marketing.HeisamemberoftheInstituteofPublicAccountantsAustralia,theMalaysianInstituteofManagement(MIM)andtheMalaysianInstituteofCorporateGovernance.HeisalsoanAssociateFellowofUniversitiKebangsaanMalaysia–GraduateSchoolofBusiness.

TunkuDato’MahmoodFawzyhasheldavarietyofdifferentpositionsthroughouthiscareer.HestartedasaforeignexchangeanalystwithNCR UK Limited and later joined Svenska Handelsbanken, Londonas a Risk Analyst. He then joined Shell Malaysia Trading Sdn Bhdin 1990 and was cross posted to Shell New Zealand Ltd in 1991.In 1997, he joined an investment holding company, Wira SecurityHoldingsSdnBhdasExecutiveDirectorandlatermovedtoTajoBhdasChiefExecutiveOfficer.TunkuDato’MahmoodFawzythenjoinedPricewaterhouseCoopers as Executive Director, Corporate Financein2000.In2002,hewasappointedtheManagingDirectorandChiefExecutiveOfficerofEngenLimited,anintegratedoilcompanyinSouthAfrica,asubsidiaryofPetroliamNasionalBerhad(Petronas).Hewasappointed Non-Executive Director of Energy Africa Limited untilJanuary 2004 and was a member of the Board of Governors of theSouthAfricanPetroleumIndustryAssociation(SAPIA).HeleftEngeninJune2005andthereafterbecametheChiefExecutiveOfficerofashippingcompanyuntilDecember2006.HejoinedKhazanahNasionalBhd (Khazanah) in May 2007 and retired as Executive Director,InvestmentsinMay2010.

TunkuDato’MahmoodFawzyalsositsontheBoardofVADSBerhad(awholly-ownedsubsidiaryofTM),HongLeongIslamicBankBerhad,Hong Leong Assurance Berhad, Hong Leong MSIG Takaful Berhad,SapuraKencana Petroleum Berhad and Malaysia Airports HoldingsBerhad.HecomplieswithParagraph15.06oftheMainLRasheholdsthreedirectorshipsinlistedissuersincludingTM.

TunkuDato’MahmoodFawzyiscurrentlytheNon-ExecutiveChairmanofTM’sBoardNominationandRemunerationCommittee(NRC)andBRCaswellasamemberoftheBoardAuditCommittee(BAC),BTCandBIC.HeisaNon-ExecutiveDirectornominatedbytheCompany’smajorshareholder,Khazanah,andhasneverbeencharged foranyoffencewithinthepast10years.HehasnofamilyrelationshipwithanyDirectororMajorShareholderoftheCompanynoranyconflictofinterestwiththeCompany.

Dato’ Danapalan, aged 69, a Malaysian, was appointedIndependent Non-Executive Director of TM on 25 April 2008and was made Senior Independent Director on 21 May 2009.He holds a Bachelor of Arts (Hons) from the University ofMalayaandaMastersinPublicAdministrationfromPennStateUniversity,USA.

He was Chairman of MCMC from February 2004 until hisretirement in March 2006. Prior to that Dato’ Danapalan wasSeniorVicePresidentoftheMultimediaDevelopmentCorporationSdnBhd(MDeC)fromJune1998toJanuary2004.Dato’Danapalanalso served as Secretary-General of the Ministry of Science,Technology and Environment from December 1991 until March1998andDeputySecretary-GeneraloftheMinistryofSocialandCommunityDevelopmentandDeputyDirectorofINTAN.

He is currently a Director of Sirim QAS International Sdn Bhd(asubsidiaryofSirimBerhad),BankSimpananNasional,andamemberontheBoardofTrusteesofM.U.S.TEhsanFoundationand Maybank Foundation. Dato’ Danapalan is also Chairman ofTelekomResearch&DevelopmentSdnBhdandaBoardmemberofUniversitiTelekomSdnBhd,wholly-ownedsubsidiariesofTM.Dato’DanapalancomplieswithParagraph15.06oftheMainLRwithonedirectorshipinalistedissuer,ieTM.

He currently serves as a member of TM’s NRC, BAC, BRCandBDRC.Hehasneverbeenchargedforanyoffencewithinthepast10yearsandhasnofamilyrelationshipwithanyDirectororMajor Shareholder of the Company nor any conflict of interestwiththeCompany.

77




qUAH POH KEATIndependentNon-ExecutiveDirector

quah Poh Keat,aged60,aMalaysian,wasappointedIndependentNon-Executive Director of TM on 25 April 2008. He is a Fellowof the Malaysian Institute of Taxation and the Association ofChartered Certified Accountants (ACCA); and a member of theMalaysianInstituteofAccountants(MIA),theMalaysianInstituteof Certified Public Accountants (MICPA) and the CharteredInstituteofManagementAccountants(CIMA).

QuahwasmadeapartnerofKPMGMalaysiaon1October1982and the Senior Partner responsible for the daily operations ofKPMGMalaysiafrom1October2000to30September2007.Priorto taking up the position of Senior Partner (Managing Partner),hewasinchargeoftheTaxPracticeandtheJapanesePracticeinKPMGMalaysia.HewasamemberoftheKPMGJapanesePracticeCouncil,thegoverningbodywithinKPMGInternationalthatlooksafteritsJapanesePracticesworldwide.Hewasaboardmemberof KPMG Asia Pacific and a member of the KPMG InternationalCouncil.QuahwasalsoVice-PresidentoftheMalaysianInstituteofTaxation.HeretiredfromKPMGon31December2007.

Quah is also an Independent Non-Executive Director of IOICorporation Berhad, Public Bank Berhad, Public InvestmentBankBerhad,PublicMutualBerhad,PublicIslamicBankBerhad,LPICapitalBerhadandLonpac InsuranceBerhad.He isalsoaTrustee of Yayasan Tan Sri Lee Shin Cheng and a member ofthe Federation of Malaysian Manufacturers’ Economic FiscalPolicies Committee. He complies with Paragraph 15.06 of theMainLRasheholdsfourdirectorshipsinlistedissuersincludingTM.

Quah currently serves as an Independent Non-ExecutiveChairmanofTM’sBACandisamemberoftheBIC.Hehasneverbeenchargedforanyoffencewithinthepast10yearsandhasnofamilyrelationshipwithanyDirectororMajorShareholderoftheCompanynoranyconflictofinterestwiththeCompany.

DATUK ZALEKHA HASSANIndependentNon-ExecutiveDirector

Datuk Zalekha, aged 59, a Malaysian, was appointedNon-Independent Non-Executive Director of TM on 9 January2008andsubsequentlyre-designatedasTM’sIndependentNon-ExecutiveDirectoron1June2011,followingherretirementfromMOF. She graduated with a Bachelor of Arts (Hons) from theUniversityofMalaya.

Datuk Zalekha began her career in the civil service in 1977, asan Assistant Director in the Training and Career DevelopmentDivisionofthePublicServiceDepartment.Shecontinuedtoservethe Government in numerous ministries including the MinistryofHealth,MinistryofSocialWelfareandtheMinistryofNationalUnityandSocialDevelopment.ShelaterjoinedtheMOFin1997asitsSeniorAssistantDirectoroftheBudgetDivisionandcontinuedto serve in various capacities including with the GovernmentProcurement Division. She was the MOF’s Deputy Secretary-General(Management)untilherretirementinMay2011.

DatukZalekhacomplieswithParagraph15.06oftheMainLRassheholdsonedirectorshipinalistedissuer,ieTM.

She iscurrently the IndependentNon-ExecutiveChairpersonofTM’sBTC.Shehasneverbeenchargedforanyoffencewithinthepast10yearsandhasnofamilyrelationshipwithanyDirectororMajor Shareholder of the Company nor any conflict of interestwiththeCompany.

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DATUK NUR JAZLAN TAN SRI MOHAMEDIndependentNon-ExecutiveDirector

Datuk Nur Jazlan, aged 47, a Malaysian, was appointedIndependent Non-Executive Director of TM on 1 June 2004. HeisaFellowoftheAssociationofCharteredCertifiedAccountants(ACCA),UK.HewasaCouncilMemberandChairmanofthePublicRelations Committee of the Malaysian Institute of Accountants(MIA)aswellasaCouncilMemberof theASEANFederationofAccountants(AFA).

In addition to his corporate experience in the financial arena,Datuk Nur Jazlan is also active in politics. He is a Member ofParliament for the Pulai Parliamentary Constituency, Johor,theHeadofUMNOPulaiandChairmanofBarisanNasional forthedivision.HewasanExcoMemberofUMNOYouthfrom1996until 2004. He is currently Chairman of UDA Holdings Berhadand alsoa Directorof UnitedMalayanLandBerhad,PrinsiptekCorporation Berhad, Jaycorp Berhad, TSH Resources Berhad,EkowoodInternationalBerhadandPatimasComputersBerhad.

Currently, Datuk Nur Jazlan holds six directorships in listedissuersincludingTMandwillcomplywithParagraph15.06oftheMainLRby1June2013.

Datuk Nur Jazlan was Non-Executive Chairman of the BAC ofTM from 2004 until 2008. Currently, he serves as a member ofTM’sBTC.Hehasneverbeenchargedforanyoffencewithinthepast10yearsandhasnofamilyrelationshipwithanyDirectororMajor Shareholder of the Company nor any conflict of interestwiththeCompany.

Dato’ Ir Abdul Rahim, aged 67, a Malaysian, was appointedIndependentNon-ExecutiveDirectorofTMon25April2008.Hegraduated from the Brighton College of Technology, UK, witha Bachelor of Science (Hons) in Electrical Engineering in 1969.He is a member of the Institute of Engineers, Malaysia and isa Professional Engineer, Malaysia (P.Eng). He also holds theElectricalEngineerCertificateofCompetencyGrade1.

Dato’ Ir Abdul Rahim began his career in 1969 with the thenNationalElectricityBoard,whereheheldvarious technicalandengineeringpositionsuntilhejoinedPernasCharterManagementSdn Bhd, a management company for the tin mining industry,in 1979. From late 1983 to 1991, he served Malaysia MiningCorporation Berhad (MMC) in various senior positions. Later,from 1991 to 1995, he moved on to MMC Engineering ServicesSdnBhdandsubsequentlytoMMCEngineeringGroupBerhadastheManagingDirector.InMay1995,hejoinedPetroliamNasionalBerhad(Petronas)asManagingDirectorofPetronasGasBerhad,wasmadeVicePresidentofPetronas’PetrochemicalBusinessin1999,andsubsequentlyretiredon31August2002.

He also sits on the boards of Scomi Group Berhad, ScomiEngineering Berhad and Global Maritime Ventures Berhad.Dato’IrAbdulRahimcomplieswithParagraph15.06oftheMainLRasheholdsthreedirectorshipsinlistedissuersincludingTM.

Dato’ Ir Abdul Rahim is currently the Independent Non-ExecutiveChairmanofTM’sBICandamemberoftheNRCandBRC. He has never been charged for any offence within thepast10yearsandhasnofamilyrelationshipwithanyDirectororMajor Shareholder of the Company nor any conflict of interestwiththeCompany.

DATO’ IR ABDUL RAHIM ABU BAKARIndependentNon-ExecutiveDirector

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DAVIDE GIACOMO BENELLO @ DAVID BENELLOIndependentNon-ExecutiveDirector

David Benello, aged 59, an Italian, was appointed IndependentNon-ExecutiveDirectorofTMon21November2011.Hegraduatedwith a Bachelor in Mathematics and obtained a Masters inMathematicsfromtheUniversityofOxfordin1976andMastersinBusinessAdministrationfromHarvardUniversityin1982.

DavidwaspreviouslyaDirectorandLeaderofUKTelecom,Mediaand Technology Practice at McKinsey & Company, a firm hejoined inAugust1982.He retired inJune2011and is currentlya Director Emeritus at the firm. He has extensive consultingexperienceintelcoengagements,mainlyinEurope(inadditiontotheUSandAsia)oncorporatestrategy,ICTstrategyandbusinessturnaroundsaswellasoperations/customerservice.Intheearlyyearsofhiscareer,heservedasaSenioratArthurAndersenandaSecondLieutenantatScuolaMilitareAlpina,Aosta,Italy.

David complies with Paragraph 15.06 of the Main LR with onedirectorshipinalistedissuer,ieTM.

David has never been charged for any offence within the past10 years and has no family relationship with any Director orMajor Shareholder of the Company nor any conflict of interestwiththeCompany.

Ibrahim Marsidi, aged 60, a Malaysian, was appointedIndependent Non-Executive Director of TM on 25 April 2008.He holds a Bachelor of Economics (Analytical) (Hons) from theUniversityofMalaya.

He was previously Managing Director and Chief ExecutiveOfficer of Petronas Dagangan Berhad until his retirement on31December2007.HejoinedPetronasin1979,whereheheldanumberofseniormanagerialpositions.Priortohisappointmentas Managing Director and Chief Executive Officer of PetronasDagangan Berhad, he was the Senior Manager of Eastern andNorthern Region, General Manager of the Liquefied PetroleumGas (LPG)BusinessandRetailBusiness inPetronasDaganganBerhad and General Manager of Crude Oil Group, Petronas.IbrahimalsositsontheBoardofMenaraKualaLumpurSdnBhd,awholly-ownedsubsidiaryofTM.

IbrahimcomplieswithParagraph15.06oftheMainLRwithonedirectorshipinalistedissuer,ieTM.

He currently serves as a member of TM’s NRC, BAC, BRC andBDRC.Hehasneverbeenchargedforanyoffencewithinthepast10yearsandhasnofamilyrelationshipwithanyDirectororMajorShareholderoftheCompanynoranyconflictofinterestwiththeCompany.

IBRAHIM MARSIDIIndependentNon-ExecutiveDirector

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ESHAH MEOR SULEIMANNon-IndependentNon-ExecutiveAlternateDirector

Eshah, aged 58, a Malaysian, was appointed Non-IndependentNon-Executive Alternate Director to Dato’ Fauziah Yaacob on4 March 2013. She has been the alternate director to severalnon-executive Directors nominated by the MoF Inc. suchas Dato’ Mat Noor Nawi, Datuk Zalekha Hassan and DatukDr Rahamat Bivi Yusoff. She graduated with a Bachelor ofEconomics (Hons) from the University of Malaya in 1980 andobtainedaDiplomainPublicAdministrationfromINTANin1981.ShelaterobtainedaMastersinBusinessAdministration(MBA)inFinancefromtheOklahomaCityUniversity,USA,in1994.

Eshahbeganhercareerinthecivilservicein1981asanAssistantDirector, Macro Economic Section in the Economic PlanningUnit of the Prime Minister’s Department, and in 1991, she wasappointed Assistant Secretary in the Government ProcurementManagement Division, MOF. Since then, she has held variouspositionsthere,includingasPrincipalDeputyAssistantSecretaryandDeputyUnderSecretary,beforeassuminghercurrentpositionas Under Secretary, Investment, MoF Inc. and PrivatisationDivisioninSeptember2006.

Eshah is a Director of Pos Malaysia Berhad, Malaysia AirportsHoldingsBerhad,GlobalMaritimeVenturesBerhad(asubsidiaryof Bank Pembangunan Malaysia Berhad) and a number ofprivatecompanies.SheisalsoanAlternateDirectorofMalaysianAirline System Berhad. Eshah complies with Paragraph 15.06of theMainLRassheholds fourdirectorships in listed issuersincludingTM.

EshahisalsothealternatemembertoDato’FauziahYaacobonTM’sBTCandBIC.Shehasneverbeenchargedforanyoffencewithinthepast10yearsandhasnofamilyrelationshipwithanyDirectororMajorShareholderoftheCompanynoranyconflictofinterestwiththeCompany.

NIK RIZAL KAMIL TAN SRI NIK IBRAHIM KAMILNon-IndependentNon-ExecutiveAlternateDirector

Nik Rizal Kamil, aged 40, a Malaysian, was appointed Non-Independent Non-Executive Alternate Director to Tunku Dato’MahmoodFawzyTunkuMuhiyiddinon29November2012.HeholdsaMastersinScience(Finance)fromLondonBusinessSchoolanda Bachelor of Science (Hons) in Economics & Accounting fromtheUniversityofBristol,UK.He isalsoanAssociateCharteredAccountantwiththeInstituteofCharteredAccountantsinEnglandandWales(ICAEW).

He started his professional career in 1995 as an Accountant/Auditor with Coopers & Lybrand, UK for a period of two years.He then returned to Kuala Lumpur in 1997 and joined ArthurAnderson&CoasanAssistantManager inAuditandBusinessAdvisory.Afteratotaloffiveyearsinaudit,hejoinedRHBSakuraMerchant Bankers Bhd in 2000 as Assistant Manager in itscorporatefinancedepartment.Subsequently,hejoinedSarawakShellBerhadasaPrincipalSectorPlannerofBusinessPlanninginMiri,SarawakfortwoyearsbeforebeingpostedtoShellRegionalExploration & Production, Singapore as a Senior BusinessAnalyst. During this period, Nik Rizal also assumed the role ofHeadofPlanningandEconomicsforShellDeepwaterBorneoLtdofBrunei.Inearly2007,hewaspostedtoShellCorporateGlobalHQ in London as a Senior Downstream Financial Analyst forShell’sGlobalLubricantsandB2Bbusinesses.HewaswithShellMalaysiaLimitedasFinanceManagerinSpecialProjectsbeforejoiningKhazanahinApril2011,whereheiscurrentlyaDirectorofInvestments.

NikRizalcomplieswithParagraph15.06oftheMainLRwithonedirectorshipinalistedissuer,ieTM.

He has never been charged for any offence within the past10yearsandhasnofamilyrelationshipwithanyDirectororMajorShareholder of the Company nor any conflict of interest withtheCompany.

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Standing from Left to RightMohdKhalisAbdulRahim*,MoharmustaqeemMohammed**,MohammadSallehYusof,MichaelParker,MohdRaisAzhar,DatukGazaliHarun*,ImriMokhtar*,ZamAriffinIsmail*,NizamArshad,IzlynRamli*,Dato’RozalilaAbdulRahman*

Seated from Right to LeftDato’SriZamzamzairaniMohdIsa*,AhmadIsmail*,SalmahMohdTaufek,IdrusIsmail*,RafaaiSamsi*

* ManagementTeam TheprofilesoftheManagementTeamaresetoutonpages84to89inclusive,ofthisAnnualReport.** PermanentInvitee

GROUP LeaDeRShiPTeaM

82




Standing from Left to RightAsmawatiYusof,JeremyKung*,MohamadMohdZain,DrZainalAbuZarim,MohamadRozaimyAbdRahman*,AziziAHadi*,GiorgioMigliarina*,HazimiKassim**,DrFaridMohamedSani*,BadrulHishamAhmad

Seated from Left to RightDatukBazlanOsman*,Dato’KairulAnnuarMohamedZamzam*,KomathiBalakrishnan,AhmadAzharYahya*,GhazaliOmar*

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DATO’ SRI ZAMZAMZAIRANI MOHD ISAManagingDirector/GroupChiefExecutiveOfficer

Dato’SriZamzamzairani,52,holdsaBachelorofScienceinCommunicationsEngineeringfromtheUnitedKingdom(UK)andhascompletedtheCorporateFinance,StrategiesforCreatingShareholderValueprogrammeatKellogSchoolofManagement,NorthwesternUniversity,USA.HewasappointedTM’sManagingDirector/GroupChiefExecutiveOfficeron25April2008.Hisvastexperienceinthetelecommunicationsindustryspansmorethan28years.HiscareerstartedinTMwhereheservedfor13yearsbeforeassumingkeypositionsinseveralmultinationals,suchasGlobalOneandlaterLucentTechnologies(Malaysia)asitsChiefExecutiveOfficer.In2005,hereturnedtoTMasSeniorVicePresident(SVP),GroupStrategyandTechnologyandthereafterasChiefExecutiveOfficer(CEO),MalaysiaBusiness,beforebeingappointed tohiscurrentoffice.Dato’SriZamzamzairani isalsoaDirectorofanumberofTMsubsidiaries includingChairmanofVADSBerhadandTMNetSdnBhd,andDeputyChairmanofGITNSdnBhd.Underhisleadership,TMhassuccessfullyrolledoutandlaunchedthehighspeedbroadbandserviceinahistoricalcollaborationwiththeGovernmentofMalaysia.

DATUK BAZLAN OSMANExecutiveDirector/GroupChiefFinancialOfficer

Datuk Bazlan, 49, is a Fellow of the Association of Chartered Certified Accountants (ACCA), UK and a CharteredAccountantof theMalaysian InstituteofAccountants (MIA).HebeganhiscareerasanauditorwithMessrsHanafiahRaslanMohamad,apublicaccountingfirm, in1986andsubsequentlyservedtheSimeDarbyGroup,holdingvariousfinancepositionsinitscorporateofficesinKualaLumpur,SingaporeandMelaka.In1993,hehadastintwithAmericanExpressMalaysiaBerhadbeforejoiningKumpulanFIMABerhadin1994,wherehewassubsequentlyappointedSVP,Finance/CompanySecretary.HejoinedCelcomAxiataBerhadin2001astheSVP,CorporateFinanceandTreasuryandwassubsequentlyappointedtheChiefFinancialOfficer(CFO)in2002priortohisappointmentasTMGroupCFOin2005.HewasappointedExecutiveDirectorofTMon25April2008.DatukBazlanalsooverseestheoperationsofGlobal&WholesaleandSupportBusiness.HesitsontheBoardsofseveralsubsidiarieswithinTMGroupincludingVADSBerhadandUniversitiTelekomSdnBhdandalsoChairmanofFiberailSdnBhdandTMInfo-MediaSdnBhd.

DR FARID MOHAMED SANIChiefStrategyOfficer

DrFarid,aged37,holdsaPhD inChemicalEngineering,aMasters inEngineeringandaBachelorofArtswith firstclasshonoursspecialisinginChemicalEngineering,allfromtheUniversityofCambridge,UK.HewasappointedTM’sChiefStrategyOfficereffective1January2012.PriortojoiningTM,hewaswithKhazanahNasionalBerhad(Khazanah)holdingthepositionofDirector,Investments,specialisinginthetelecommunicationssector.HehasservedinKhazanah’sTransformationManagementOfficeandasSVP,ManagingDirector’sOffice.DrFaridwasaconsultantatMcKinsey&CompanyfortwoyearsbeforejoiningKhazanahin2004.

PROFiLe OF ManaGeMenTTeaM

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GIORGIO MIGLIARINAChiefTechnologyandInnovationOfficer/ChairmanManagedAccountsGiorgio,44,holdsaMasters(Sc)inElectronicEngineeringfromthePolytechnicUniversityofTurin,ItalyandanMBAfromINSEAD,France.HewaspreviouslyaPartneratMcKinsey&CompanybasedinLondonandBeijing.Thereheservedsome of the world’s leading operators and high tech companies. Prior to joining McKinsey, Giorgio helped launchInfostrada SpA, Italy’s second fixed line operator, where he held positions at network planning and corporatedevelopment.BeforeInfostrada,heworkedwithOlivettiSpA.GiorgiowasappointedTM’sChiefTechnologyandInnovationOfficer (CTIO) on 1 May 2009, responsible for Network, IT, R&D and overall technical operations. In addition to theCTIOrole,GiorgiowasrecentlyentrustedtooverseethetransformationoftheManagedAccountsclusterinTM,whichcomprisesTM’sEnterprise,GovernmentandICT/BPObusinesses.HewasnamedCTOoftheYear2012inAsiabyAsiaCommunicationAward.

DATO’ ROZALILA ABDUL RAHMANChiefMarketingOfficerDato’ Rozalila, 51, holds a Bachelor in Food Science and Technology and a Diploma in Science with Education fromUniversitiPutraMalaysia.ShealsoholdsaCertificateofMeritfromSophiaUniversity,Tokyo,JapanonJapanAirlinesScholarshipProgramme.Shehas23yearsmarketingandsalesexperienceinmultinationalcompanies,beginningin1989asamanagementtraineewithUnileverMalaysia.After10years,shemovedtoKelloggAsiaMarketingasMarketingManager, Innovations for South East Asia. In 2001, she joined Reckitt Benckiser as Marketing Manager (Malaysia/Singapore)beforemovingtoBankSimpananNasionalasDirectorofSalesandMarketing.In2006,Dato’RozalilajoinedMaxis Communications Berhad as General Manager (GM), Media, Research and Events in the Consumer BusinessDivisionandin2002headedtheSegmentMarketingteamfortheMalaymarket,EastMalaysiaandMigrantsegment.ShejoinedTMasChiefMarketingOfficeron17February2010andisresponsibleforGroupMarketing,RetailProductandCustomerServiceManagement.

MOHD KHALIS ABDUL RAHIMChiefHumanCapitalOfficerKhalis,49,holdsaMastersinHumanResourceManagementfromtheUniversityofCanberra,AustraliaandaBachelorofSciencewithHonours inAppliedPsychology fromCoventryUniversity,UK.He isalsoaCertifiedAdvanceHumanResource Professional (CAHRP) from the Malaysian Institute of Human Resource Management. He has extensiveexposureinhumancapitalmanagement,havingservedinseveralmultinationalcompaniesover20yearsinthefieldof human resource management across different industries. Khalis has been involved in various disciplines of theprofessionfromorganisationaldevelopmentandchangemanagementtoperformancemanagement,industrialrelations,HRreengineeringaswellastalentdevelopment.HewastheHumanResourcesDirectorofColgatePalmoliveMalaysiafromJune2000untilOctober2006beforemovingtoFreescaleSemiconductorasHumanResourcesDirectorresponsibleforMalaysia,SingaporeandAsiaSupplyChain.He joinedTMas itsChiefHumanCapitalOfficeron17August2009.KhaliswasawardedChiefHumanResourceOfficeroftheYearandHRLeadershipAwardatthe21stGlobalHRExcellenceAwardsheldinIndiainFebruary2013.

IDRUS ISMAILChiefLegal,ComplianceandCompanySecretaryIdrus,59,holdsaBachelorinEconomicsfromtheUniversityofMalayaandaBachelorofLawfromtheNationalUniversityofSingapore.HehasaCertificateinTranslationfromtheNationalTranslationInstituteofMalaysia,anExecutiveMastersin Islamic Banking and Finance from Asia e University and is currently pursuing an online Chartered Islamic FinanceProgrammeattheInternationalCentrefor IslamicFinance(INCEIF).HewascalledtotheMalaysianBar in1988. Idrusstarted his career as a management trainee with Petroliam Nasional Berhad (Petronas) and brings with him over30yearsofexperiencemostly inconventionaland Islamic financial institutions,whereheservedascompanysecretaryas well as in-house counsel. Before joining TM, he was Company Secretary of the CIMB Group, served the PROKHASsecretarial department (providing secretarial services to Minister of Finance, Inc. companies) and was Senior Counselof Islamic Banking and Finance in a major corporate law practice. He joined TM as Chief Legal and Compliance on1December2009andassumedthepositionofCompanySecretaryon18January2010.HeisalsoresponsibleforimplementingprogramstoinculcateoverallethicsandintegritypracticesinTMascontainedinTM’sCodeofBusinessEthics.

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Profile of Management Team

DATUK GAZALI HARUNChiefProcurementOfficer

DatukGazali,54,holdsaBachelorofScienceinFinancefromtheNorthernIllinoisUniversity,USAandin1984obtainedhis MBA from the Governors State University, USA. He is also a Chartered Accountant of the MIA. He gained vastexperience incorporatebankingandcorporate financewhileservingata localmerchantbankprior to joiningTMin1990.InTM,DatukGazalihasbeeninvolvedintreasurymanagement,fundraisingactivities,mergersandacquisitions,investorrelationsandoverseeingtheEnterpriseRiskManagementProgrammefortheGroup.HewastheVicePresident,FinanceofTMWholesalebeforeassuminghiscurrentpositionasChiefProcurementOfficeron1June2005.

HAZIMI KASSIMChiefInternalAuditor

Hazimi, 48,holdsaBachelorofArts inAccounting from theUniversityofCanberra,Australia.Healsoattended theWhartonAdvancedManagementProgramattheUniversityofPennsylvania,USAin2006.HeisaCertifiedPracticingAccountant(CPA)oftheAustralianSocietyofCertifiedPracticingAccountants(ASCPA),aCharteredMemberoftheMIAandtheInstituteofInternalAuditorsMalaysia(IIAM).Hehasvastexperienceinexternalandinternalaudit,financialandmanagementaccounting,corporatefinanceaswellasstrategicplanning,businessdevelopmentandinvestorrelations.Hiswide-rangingcareertodatehasspannedacrossauditandconsultingservicestosecurities,insuranceandbankingand,now,telecommunications.HewastheChiefAuditExecutiveintheInternalAuditDivisionofMalayanBankingBerhadandlaterHeadofCorporateandStrategicPlanningbeforejoiningTMastheChiefInternalAuditoron1November2011.

AHMAD ISMAILChiefCorporateandRegulatoryOfficer

Ahmad,53,holdsaBachelorofScience(Hons) inElectrical&ElectronicEngineeringfromtheUniversityofAstoninBirmingham,UKandanMBAfromtheMultimediaUniversity,Cyberjaya.HejoinedTMin1983asanAssistantControllerofTelecomandheldvariousengineeringpositionsbeforeengaginginmoremanagerialresponsibilities.Inhis30yearsintheGroup,hehasbeenManagingDirectorofTMInternationalBangladeshLimited(nowknownasRobiAxiataLimited),GM,BusinessStrategy,TMRetailandChiefStrategyOfficerofTelcoStrategyDivision.Priortothat,AhmadwastheCEOofTelekomSalesandServicesSdnBhdaswellasStateGMforPenangandMelaka.HethenassumedthepositionofVicePresident(VP),CustomerServiceManagementin2008andwaslaterappointedVP,ProgrammeandPerformanceManagementOfficeinJuly2010.AhmadwasappointedChiefCorporateandRegulatoryOfficeron1October2010.

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RAFAAI SAMSIDeputy,ChiefTechnology&InnovationOfficer

Rafaai, 55, obtained a Masters in Communications Management from the University of Strathclyde, UK in 2005and a Bachelor of Science (Hons) in Electronic Engineering from Brighton University, UK in 1986. His career intelecommunications started with the then Jabatan Telekom Malaysia in 1978, following which he assumed roles ofincreasingresponsibilitycoveringbroadtechnicalandtelecommunicationfieldswithintheTMGroup.HewasappointedCEOofMeganetCommunicationsSdnBhd,asubsidiaryofTM,inJuly1997beforereturningtoTMmainstreaminJuly2001,wherehewasassignedasGMofanumberofdivisionsincludingStateBusinessOperations,MarketDevelopmentand Domestic Carrier Business Division. He was appointed VP, Marketing and Sales for the Wholesale segment inOctober2006andsubsequentlypromotedtoleadtheWholesaleLineofBusinesson1July2008.On1January2013,RafaaiwasassignedasDeputyChiefTechnology&InnovationOfficer(DeputyCTIO)toruntheday-to-dayoperationsandturn-aroundinitiativesoftheITandNetworkTechnologyDivision.

IMRI MOKHTARExecutiveVicePresident,Consumer/CEO,TelekomSales&ServicesSdnBhd

Imri,39,graduatedin1996withFirstClassHonoursinElectronicsEngineeringandManagementStudies(BEng)fromtheUniversityCollegeofLondon,wherehewasonaTMscholarship.HestartedhiscareerinTM’sAseanjoint-venturecompany,AcasiaCommunicationsSdnBhd,beforejoiningtheKualaLumpurofficeofMcKinsey&Company.HelaterjoinedAstro,apay-TVoperator,toestablishandheaditsinteractiveTVbusinessbeforere-joiningTMinAugust2005asGMofStrategyDevelopment.HewasmadeGM,ProgrammeManagementOfficein2006andlaterVP,ProgrammeandPerformanceManagementOfficeinJune2008.ImriwaspromotedtohiscurrentpositionasExecutiveVicePresident(EVP),Consumeron15July2010andisresponsibleformanagingtheConsumerbusinessofTMGroup.HewasalsoappointedCEOofTelekomSales&ServicesSdnBhdeffective1January2012.

AZIZI A HADIExecutiveVicePresident,SME

Azizi,48,holdsanMBAfromUniversitiPutraMalaysiaandaBachelorofScienceinElectricalEngineeringfromWichitaStateUniversity,USA.Hehasmorethan20yearsofexperienceinthetelecommunicationsindustry,whichhasincludedengineering,operations,salesandproductdevelopmentandmanagement.AzizistartedhiscareerwiththeMalaysianArmy as an Engineering Officer in the Royal Signals Regiment from 1987 to 1996, where his main responsibilitieswere inplanningtacticalradionetworks,evaluatingnewequipmentandtraining.HewasalsotheCountryBusinessDevelopmentManagerofGlobalOne,an international telecommunicationsserviceproviderwherehewasentrustedwith the country’s MNC sales in 1999. Prior to joining TM in 2006 as GM, Technology and Innovation, he was withMaxisCommunicationsBerhadastheHeadofBroadbandBusinessUnitandinNetworkEngineeringandOperations.AziziwastheVP,RetailProductofTMbeforeassuminghiscurrentpositionasEVP,SMEinJune2011.

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Profile of Management Team

GHAZALI OMARExecutiveVicePresident,Enterprise

Ghazali,55,holdsaBachelor(Hons)inElectricalandElectronicEngineeringfromtheUniversityofLeeds,UKandanMBAfromtheMultimediaUniversity,Cyberjaya.Hehasmorethan32yearsofexperienceinthetelecommunicationsindustry,beginninghiscareerwiththethenJabatanTelekomMalaysiain1980asPlanningandDevelopmentEngineerspecialisinginDataCommunications.HewaslaterappointedGM,MarketingandSales,TMNetSdnBhdin2002andVPofEnterpriseandGovernmentSales,TMRetailin2007.GhazaliwastheCEO/ExecutiveDirectorofVADSBerhad,awholly-ownedsubsidiaryofTM,beforeassuminghiscurrentpositionasEVP,Enterpriseon1February2009.

DATO’ KAIRUL ANNUAR MOHAMED ZAMZAMExecutiveVicePresident,Government

Dato’KairulAnnuar,49,holdsaBachelorinEngineeringSciencefromtheUniversityofWesternOntario,CanadaandanMBA from theMultimediaUniversity,Cyberjayaandattended theAdvancedManagementTrainingprogrammeatINSEADin2003.Hehasover20yearsofexperienceinthetelecommunicationsindustry,beginningwiththethenJabatanTelekomMalaysiain1985asaHumanResourcesPlanningExecutive.Hehassinceheldvariouspositionsinlocalaccess,switchingandtransmissionnetworks.HewasappointedGMoftheTerengganuOperationsAreain1998andin2002,wasappointedthePersonalAssistanttotheGroupChiefExecutive.In2004,hewasappointedGMofCorporateAffairsandlaterVP,Consumer&BusinessSalesDivisioninTMRetail.PriortoassuminghiscurrentpositionasEVP,Governmentin2009,hewastheCEOofTelekomSales&ServicesSdnBhd.

MOHAMAD ROZAIMY ABD RAHMANExecutiveVicePresident,Global&Wholesale

Rozaimy,41,obtainedaBachelorinDistributedComputingfromtheUniversityofEastLondon,andaMastersofScienceinTechnologyManagementfromStaffordshireUniversity,UK.HeattendedtechnicalandtelecommunicationstrainingprogrammeattheAT&TSchoolofBusinessandTechnologyandAT&TBellLabsinNewJersey,USA.HealsoattendedtheAdvancedLeadershipManagementProgrammeattheMadinahInstituteofLeadershipandEntrepreneurship,SaudiArabia.Hehasmorethan17years’experienceinthetelecommunicationsindustry.HewastheAT&TSalesDirector,AT&TGlobalWholesale,beforejoiningTMin2006asGMofProductMarketing.HewasthenappointedEVPofTMGlobalon1July2009,responsibleforTMRegionalofficesintheUnitedKingdom,USA,HongKongandSingapore.Followingthere-clusteringoftheCompany’smarketsegments,RozaimywasassignedtoleadtheGlobal&Wholesalecluster,overseeingtheoperationsofglobalandwholesalebusinesseseffective1January2013.

JEREMY KUNG ENG CHUANGExecutiveVicePresident,NewMedia/CEO,TMNetSdnBhd

Jeremy,49,holdsanHonoursDegreeinComputerSciencefromtheUniversityofOttawa,Canada.Hehasmorethan20years’experienceintechnicalandmanagerialrolesinITsystemsdevelopmentformedia,telecommunicationsandBusiness-to-Consumer(B2C)business.HespentthreeyearsatJ.WalterThompsonandsevenyearsatStar-TV,beforeservingmorethan10yearsatPCCWLimited(PCCW),HongKonganditsgroupofcompanies.HislastpositionstherewereasSVPofCustomerAdvocacyandChiefInformationOfficerofPCCWGlobal,abusinessunitofPCCWthatprovidesglobaltelecomservices.JeremyjoinedTMGroupasCEOofTMNetSdnBhdon20May2008andwasappointedEVP,Consumeron1February2009.HewasappointedEVP,NewMediaeffective15July2010andremainsasCEOofTMNetSdnBhd.

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AHMAD AZHAR YAHYACEO,VADSBerhad

Ahmad Azhar, 48, holds a Bachelor of Science in Electrical Engineering from Oklahoma State University, USA.He began his career in 1987 as an engineer in Agilent Technologies (formerly known as Hewlett Packard). He thenjoined management consultants, Accenture in 1990 servicing a portfolio of clients in Malaysia, Asia and the MiddleEastinvariousindustriesfromcommunicationstohightechnology,oilandgasandthepublicsector.Hisexperienceincludesstrategicplanningandchangemanagement,businessandoperationssupportsystems,enterpriseresourcemanagement,revenueandcustomerrelationshipmanagement.HebecameaPartneratAccenturein2000beforejoiningTMasGroupChiefInformationOfficeron2August2004.In2008,AhmadwasappointedTM’sProgrammeDirectoroftheHigh-SpeedBroadband(HSBB)ProgrammeandcontributedtothesuccessfullaunchofUniFiinMarch2010.HewastheChiefStrategyOfficerofTMpriortohisappointmentasCEOofVADSBerhadon1January2012.

ZAM ARIFFIN ISMAILVicePresident,SupportBusiness

Zam Ariffin, 49, holds a Masters in Professional Accounting from St. Louis University, and a Bachelor of Science inAccountingfromEmporiaStateUniversity,bothintheUSA.HeisalsoaCharteredAccountantoftheMIA.Hestartedhiscareerin1987asaBondOfficeratCagamasBerhad.In1989,hejoinedTMintheCorporateFinanceDivisionandwastheAssistantGeneralManagerofFinancingandSpecialProjects,beforejoiningTelekomCellularSdnBhdasGM,Financein1996.From2000to2006,heservedinMaxisCommunicationsBerhadasHeadandSeniorManagerintheBusinessandFinancialPlanningDepartment,NetworksEngineeringandOperationDivisionandlaterintheContractManagementDepartment,FinanceandAdministrationDivision,beforereturningtoTMasGM,TMVentures.PriortohiscurrentpositionasVP,SupportBusiness,hewastheGM,SubsidiaryManagementofGroupBusinessDevelopmentandTransformation. Inaddition tohiscurrentposition,ZamwasappointedasChiefOperatingOfficerofMultimediaUniversity,assistinginitstransformationeffectiveFebruary2013.

IZLYN RAMLIVicePresident,GroupCorporateCommunications

Izlyn,42,holdsaMastersinBusinessAdministration(Distinction)fromCityUniversity(Cass)BusinessSchool,London,specialisinginStrategicManagementofTechnologyandE-BusinessandaBachelorofScience(Hons)inEconomicsfromUniversityCollegeLondon.Shestartedhercareer in1992atPricewaterhouseCoopersbeforemovingtoBzWCapitalasaninvestmentanalyst.IzlynjoinedTMin1998andserved10yearsinGroupStrategyandPlanning.From2006until2008, she was also appointed Special Assistant to the TM Group Chairman, as key policy liaison officer for nationalandinternationalforaandorganisations,includingAPEC,APECBusinessAdvisoryCouncilandUnitedNationsGlobalAlliance, focusedon ICTDevelopmentand ICT forDevelopment.Following theTMdemerger in2008, Izlynmoved toAxiataGroupBhdandwaspromotedtoheadtheCorporateCommunicationsDivision.ShewasakeymemberoftheAxiatarebrandingteam,andwasalsokeyincraftingAxiata’sCorporateResponsibilityStrategy.IzlynreturnedtoTMasVP,GroupCorporateCommunicationson1October2010.

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Boards and shareholders must embrace the fact that good business is not just about achieving the desired financial bottom line by being competitive. It is equally about creating shareholder value, which can only be sustained by well-informed strategic direction and engaged oversight, which stretch beyond short-term financial performance. Good corporate governance cannot be achieved merely on the strength of regulations. Directors have a duty not just in setting strategic direction and overseeing the conduct of business in compliance with laws, they should also be effective stewards and guardians of the company in respect of ethical values, and ensuring an effective governance structure for the appropriate management of risks and level of internal controls.

tan sri Zarinah anwarFormer Chairman, Securities Commission

Malaysia, at the launch of the MalaysianCode on Corporate Governance 2012

STaTeMenTOnCORPORaTeGOVeRnanCe

90


Accountabilitywww.tm.com.my


The Board of Directors of Telekom Malaysia Berhad (TM)recognises the importance of corporate governance whichadds to the intrinsic value of an organisation. An effectivecorporate governance structure lies at the core of theCompany’spursuittorealiseitsvisionofbecomingMalaysia’sleading new generation communications provider. Thisstructure focuses on creating and enhancing shareholdervalue by striking a balance between short-term financialperformance and long-term sustainability through soundgovernancethatupholdscorporateethics,riskmanagementandeffectiveinternalcontrols.

Throughout the years, the Board has made a concertedefforttoensurethatTM’scorporategovernanceframework,internalprocesses,guidelinesandsystemsremainrobustandrelevant by abiding with applicable regulatory requirementsandimplementingappropriateriskmanagementandinternalcontrols.

TESTIMONY TO CORPORATE GOVERNANCETM’scorporategovernancemodelhasbeenbuiltandenhancedbasedonthefollowingrequirementsandguidelines:

• Malaysian Code on Corporate Governance 2012 (MCCG2012)

• Main Market Listing Requirements (Main LR) of BursaMalaysiaSecuritiesBerhad(BursaSecurities)

• Corporate Governance Guide: Towards BoardroomExcellence(CGGuide)byBursaSecurities

• CorporateDisclosureGuidebyBursaSecurities• Green Book on Enhancing Board Effectiveness by the

PutrajayaCommitteeonGLCHighPerformance(PCG)• Internationalbestpracticesandstandardsoncorporate

governance

TMalsobenchmarksitselfagainsttheMinorityShareholderWatchdog Group’s Corporate Governance Scorecard. AstestimonytoTM’scontinuouseffortsinensuringtransparency,accountabilityandequalityinitsgovernanceandstakeholdermanagement as well as disclosure, TM was accorded theSilverAwardforOverallExcellenceinaCorporateReportattheNationalAnnualCorporateReportAwards(NACRA)2012.TM also retained the Industry Excellence Award for MainBoardCompaniesintheTradingandServicescategory.

DetailsofotherlocalandinternationalawardsreceivedbyTMGroupin2012areprovidedonpages54to55inclusive,ofthisannualreport.

The Board is pleased to provide in the following pages astatementonhowtheCompanyhasappliedtheeightprinciplesand26recommendationssetoutinMCCG2012andtheextentofitscompliancewiththeseprinciplesandrecommendationsthroughoutthefinancialyearended31December2012.

BOARD OF DIRECTORSTMcontinuestobeledandcontrolledbyanactive,engagedandexperienced Board consisting of local and foreign Directorswithawiderangeofbusiness,financial,technical,regulatory,privateandpublicservicebackgroundsandexperienceinthetelecommunicationsindustry,locallyandabroad.

Board CharterThe Board has adopted a Board Charter (Charter) for theCompanywhichembodiesthepre-existingBoardgovernance,previously intheformofseparatetermsofreferences(ToR)for the Board and its Committees. It has also capturedand formalised governance practices, Board policies andguidelines subsisting throughout the Company onto oneformaldocumentthatwouldassistinprovidingclearguidancetoallstakeholders.

Like its predecessor, the Charter continues to providereferences for Directors in relation to the Board’s role,powers, duties and functions. Apart from reflecting currentbest practices and applicable rules and regulations, theCharteralsooutlinesprocessesandproceduresfortheBoardanditscommitteesindischargingitsstewardshipeffectivelyandefficiently.

The Board has also opted to retain recommendations andguidelines on corporate governance established from theearliercodesoncorporategovernancesthatcomplementthemorerecentrulesandrequirements,toserveasaguideongoodcorporategovernance.

TheCharterwillbereviewedannuallyaspartoftheexistingBoardPerformanceImprovementProgramme(BPIP)toensureconsistencywith theBoard’sobjectivesand responsibilities,andadherencetotherelevantrulesandregulationsaswellasinternationalstandardsofcorporategovernance.

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Accountability www.tm.com.my

Statement on Corporate Governance

The Charter is accessible to the public on the Company’sofficial website at www.tm.com.my and any update thereofwillbeuploadedtothewebsiteaccordingly.

Roles and Responsibilities of the BoardThe Charter delineates the functions of the Board and theManagement while maintaining a symbiotic relationshipbetween the twogroups,enabling theeffectiveexecutionoftheirrespectivedutiesandresponsibilities.

TheBoard’sprincipalfocusistheoverallstrategicdirection,development and control of the Group in an effective andresponsible manner. The role of Management, on the otherhand,istorunthegeneralbusinessoperationsandactivitiesandmanagetheGroup’sfinancialmattersinaccordancewithestablisheddelegatedauthorityfromtheBoard.

Indischargingitsstewardship,theBoardisconstantlymindfulofsafeguardingtheinterestsofallstakeholders.

TheBoardcontinuedtoobserveitsdutiesandresponsibilitiesduringtheyear,guidedbythefollowingsixcoreresponsibilitiesindischargingitsduties:

• ReviewandapproveastrategicbusinessplanfortheGroup.

Every fourth quarter of the financial year, the Boardthoroughly reviews and deliberates on the Group’sstrategic and business plans for the coming year. TheBoard provides guidance and input in developing theGroup’s strategies and ensures that the ManagementhasgivensufficientthoughttoallrelevantaspectsthatsupporttheGroup’scurrentandfuturebusinessdirectionin formulating the strategies. Progress of the plans,and thechallenges faced,are reported to theBoardateveryBoardmeetingthroughouttheyear,andhalf-yearreviews are also conducted to monitor Management’simplementationoftheapprovedstrategicplans.

• OverseeandevaluatetheCompany’sbusinessconduct.

The Board is apprised of the Company’s performanceand balanced scorecards at each of its meetings.Effective2012,thelinesofbusiness(LOBs)andselecteddivisionspresenttheirperformance,businessprioritiesandkeyfocusareasfortheyearwiththeaimofhavingfocused and closer engagement with the Board. TheirperformanceismeasuredandtrackedagainstapprovedKeyPerformanceIndicators(KPIs).

• Identifyandmanageprincipalrisks.

Inensuringappropriatemanagementofrisks,theBoard,viatheBoardRiskCommittee(BRC),constantlymonitorsthereviewandmanagementofprincipalrisksinensuringsustainabilityoftheCompany’sbusiness.

• Monitorsuccessionplanning.

The Nomination and Remuneration Committee (NRC)ensuresaneffectivesuccessionplanningisinplaceforboththeBoardandSeniorManagementofTMGroupandreportstheprogressthereoftotheBoard.

• Develop and implement an investor relations (IR)programme.

The Board recognises that a sound IR programme isvital in managing investors’ interest and perception ofthe Company. Continuous engagement is maintainedwith the investing community through a planned IRactivitiesschedulemanagedbytheIRUnit.TheCharteralso outlines the Company’s policy on communicationwith stakeholders based on pre-existing InternalCommunicationPolicyguidelines.

• Review the adequacy and integrity of the Company’sinternalcontrolsystems.

TheInternalAuditfunctionoftheCompanyistaskedwithmonitoringtheinternalcontrolsystemsthroughouttheCompanyandreportingitsfindingsdirectlytotheBoardAudit Committee (BAC). BAC will review the adequacyandintegrityoftheinternalcontrolsystemsandensurethe implementation of appropriate internal controlsystems,supportedbytheexternalauditor’sreport.

Apart from these core responsibilities, the Board alsotakes full independent responsibility and accountability forthe smooth functioning of core processes involving Boardgovernance,businessvalueandethicaloversight.Tofacilitatethe effective discharge of these responsibilities, dedicatedBoard Committees have been established with clear ToR,comprising Directors who have committed their time andeffortasmembers.

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Separation of Power between the Board and ManagementTM has a clear policy for identifying and separating thefunctionsof theBoardandManagement,and theChairmanandExecutiveDirectorsinensuringthesmoothrunningoftheCompany’sbusinessandoperations.

The roles of the Non-Independent Non-Executive (NINE)Chairman, Dato’ Sri Dr Halim Shafie, and the ManagingDirector/GroupChiefExecutiveOfficer(MD/GroupCEO),Dato’SriZamzamzairaniMohdIsa,arekeptseparatewithacleardivisionofresponsibilities, in linewithbestpracticesandtoensure appropriate supervision of the Management. Suchseparation ensures a balance of power and authority in theBoard.Moreover,Dato’SriDrHalimShafieisneitherpreviouslyaCEOnoramemberoftheCompany’sManagement.

The Chairman is responsible for the effectiveness of therelationship between the Non-Executive and ExecutiveDirectors.Withvastexperiencegainedduringhisemploymentinthegovernmentsectorandhisthree-and-a-half-yeartenureasTMChairman,Dato’SriDrHalimShafieiswellequippedtointeractwithglobalindustryleaders,buildrelationshipswithstakeholdersandparticipateactivelyinvariousinstitutions.TheExecutiveDirectors,GroupCEOandGroupChiefFinancialOfficer (CFO) have their own respective functions that theyare responsible for in assuring the smooth running of theCompany.TheirprimaryareasofresponsibilitiesarecapturedandevaluatedthroughtheirrespectiveKPIswhicharetabledandapprovedbytheBoardearlyintheyear.TheGroupCEOisresponsiblefortheimplementationofbroadpoliciesapprovedby theBoardand isobliged to reportanddiscussatBoardMeetingsallmaterialmatterscurrentlyorpotentiallyaffectingtheGroupanditsperformance,includingstrategicprojectsandregulatorydevelopments.

TheGroupCFOisresponsibleforthefinancialmanagementoftheGroup,developinginitiativesandstrategiestoimprovethe Group’s overall performance, implementing businessand economic strategies, monitoring treasury aspects, andforecasting and analysing the Group’s long-term financialsituation. He also serves as the front person for the Groupin interactions with the market, and oversees the Global &WholesaleandSupportBusiness.

TheExecutiveDirectorshaveestablishedseveralmanagementcommitteestosupportthemindischargingtheiroperationaland management duties. Their views and reviews of theGroup’sobjectives,strategiesandoperationsarediscussedatmonthlyforumswiththeSeniorManagement.

In accordance with best practices on corporate governance,Dato’DanapalanT.PVinggrasalamcontinuestoplayhisroleas the Senior Independent Non-Executive Director (SID) ofTM.He is themainconduit to the IndependentDirectors, towhom concerns pertaining to the Group may be conveyedby shareholders and stakeholders. All concerns relatingto the Group can be channelled to the SID’s email address,[email protected].

Board Composition and BalanceThereare12Directorscurrentlyon theBoardofTM,whichhas reached its maximum size as provided under theCompany's Articles of Association (AA). The diverse andconclusiveBoardconsistsofaNINEChairman,twoExecutiveDirectorsdesignatedastheMD/GroupCEOandtheExecutiveDirector/GroupCFO,twoNINEDirectors(NINEDs)andsevenIndependent Non-Executive Directors (INEDs), inclusive ofone foreign Director. Having a Non-Independent Chairman,thesevenIndependentDirectorsformamajorityontheBoardofDirectors.TMalsohastwoAlternateDirectorsdesignatedasNINEAlternateDirectorsonitsBoard.

The current Board composition complies with Paragraph15.02 of the Main LR, as more than half the members areIndependentDirectors,andfulfilsthecriteriaofindependenceas defined under paragraph 1.01 of the Main LR. The highproportionofINEDsfurtherprovidesforeffectivechecksandbalancesinthefunctioningoftheBoard.

ThesevenINEDs,byvirtueoftheirrolesandresponsibilities,represent minority shareholders’ interests. They areindependent of Management and free from any undueinfluence from interested parties which could materiallyinterfere with the exercise of their independent judgment.They play a significant role in bringing impartiality andscrutiny to Board deliberations and decision-making, andalsoservetostimulateandchallengetheManagementinanobjectivemanner.This isparticularlysoas the INEDschairTM’smainBoardCommittees,namelytheBAC,BoardTenderCommitteeandBoardInvestmentCommittee.

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Fostering Commitment of the Board Inadditiontosevenscheduledmeetingsduringtheyeartodeliberateanddecideoncoreissuesandquarterlyfinancialresultsbasedonpredeterminedagendas,twospecialmeetingswereheldwhereimmediateorstrategicdecisionsneededtobemade.AstrategicGroupCEO-TMBoarddialoguewasalsoheldinJune2012todeliberateonTM’sperformanceagainstitsaspirationsanddiscussnewgrowththemesbeyond2015.ABoardretreatwasheldinthefourthquartertodeveloptheGroup’sstrategicbusinessplanandfinancialtargets.BesidestheBoardmeetings,anurgentdecisionwasapprovedviaoneDirectors’CircularResolutionduringtheyear.

AllDirectorshavecompliedwiththeminimumattendanceofatleast50%ofBoardmeetingsheldinthefinancialperiodpursuanttotheMainLR.DetailsofattendanceofeachDirectorontheBoardandrespectiveBoardCommitteesforthefinancialyearended31December2012areasfollows:

No. Directors1

TM Board Meeting BAC NRC2 BTC BRC

Number of Meetings Number of Meetings Number of Meetings Number of Meetings Number of Meetings

Attended /Held

% Attended /Held

% Attended /Held

% Attended /Held

% Attended /Held

%

1. Dato’SriDrHalimShafie(Chairman)

9/9 100.0 – – – – – – – –

2. Dato’SriZamzamzairaniMohdIsa(MD/GroupCEO)

9/9 100.0 – – – – 8/8 100.0 – –

3. DatukBazlanOsman(ED/GroupCFO)

9/9 100.0 – – – – 2/23 100.0 3/3 100.0

4. Dato’MatNoorNawi 5/9 55.6 – – – – 5/84 62.5 – –

5. TunkuDato’MahmoodFawzyTunkuMuhiyiddin

8/9 88.9 9/10 90.0 3/3 100.0 8/8 100.0 3/3 100.0

6. Dato’DanapalanT.PVinggrasalam 9/9 100.0 10/10 100.0 3/3 100.0 – – 3/3 100.0

7. QuahPohKeat 9/9 100.0 10/10 100.0 – – – – – –

8. DatukZalekhaHassan 8/9 88.9 – – – – 8/8 100 – –

9. Dato’IrAbdulRahimAbuBakar 8/9 88.9 – – 3/3 100.0 – – 3/3 100.0

10. YBDatukNurJazlanTanSriMohamed

6/9 66.7 – – – – 7/8 87.5 – –

11. IbrahimMarsidi 9/9 100.0 10/10 100.0 3/3 100.0 – – 3/3 100.0

12. DavidBenello 9/9 100.0 – – – – – – – –

Note:1. AllBoardandCommitteemembersmettheminimumpercentagerequiredformeetingattendance.2. ApartfromthethreeNRCmeetings,threeNRCCircularResolutionswereissuedduringtheyear.3. SincehisappointmentasanadditionalBTCmembereffective25August2012,twoBTCmeetingswereheld.4. Dato’MatNoorNawiattendedfiveoutofeightmeetingsheldduringtheyear,whilehisalternate,PuanEshahMeorSuleiman,attendedtwo

meetingsinhisstead.Dato’MatNoorNawihasresignedasDirectoron28February2013.

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Inmaintainingandmonitoringthe limitationondirectorshipasrequiredbytheMainLR,theDirectorsuponappointment,and from time to time during their tenure, will notify theCompanySecretaryof theirdirectorship inothercompaniesfordisclosuretotheBoardatBoardmeetings.TheBoardisoftheopinionthattheprovisionsoftheCompaniesAct,1965(Act)andMainLRaresufficient toensureadequatecommitmentgivenbytheDirectorstoperformtheirduties.EachDirector,moreover,isabletodiscernanappropriateamountoftimetocommit to theCompanywithout itbeing formallyregulated.CurrentlyallTMDirectors,includingAlternateDirectors,saveforoneINED,complywiththenewMainLRrestrictionoffivedirectorshipsonlistedissuers.

TheBoardissatisfiedwithitsexistingnumberandcomposition,which is appropriate given the complexity and dynamics oftheGroup’sbusiness.ThecurrentBoardofDirectorshastheprerequisiteskillsetsandexperiencetoguidetheformulationofTM’sstrategicplansandfutureaspirations.

TheDirectors'biographies,whichappearonpages74 to81of this annual report, demonstarate a wealth of experienceand skill sets for the efficient management of the Group'sbusiness.

Board Effectiveness EvaluationIn2004,TMadoptedtheBoardEffectivenessEvaluation(BEE)whichcomprisesaBoardEvaluation,aCommitteeEvaluationandaBoardofDirectors’Self/PeerAssessment.TheBEEisdesignedtoimprovetheBoard’seffectivenessaswellasdrawtheBoard’sattentiontokeyareasthatneedtobeaddressedinordertomaintaincohesionoftheBoarddespiteitsdiversity.

Performance indicators on which the Board’s effectivenessisevaluatedincludetheBoard'scomposition,administrationand processes, conduct, accountability, interaction andcommunication with Management and stakeholders,responsibilityand itsevaluationof theChairmanandGroupCEO. Whilst performance indicators for individual Directorsincludetheirinteractivecontributions,understandingoftheirrolesandqualityofinput.

The BEE involves the completion of questionnaires on theeffectivenessoftheBoardofDirectorsasawhole,aswellasthatoftheBoardCommittees.TheCommittees’structureandprocessesaswellasaccountabilitiesandresponsibilitiesareevaluatedinassessingtheireffectiveness.QuestionnairesarealsocompletedbytheDirectorsonSelfandPeerAssessments.

In line with the issuance of MCCG 2012, the BEE wasenhancedin2012toobtaintheDirectors’feedbackonBoardComposition and Ways to Foster Commitment to addressissuesonthetenureofIndependentDirectorsandDirectors’time commitment to carry out their responsibilities andtraining. Notification to the Chairman on time commitmentpriortotheappointmentofDirectorswasalsoadded.

TheBEE2012findingswerebasedonDirectors’feedbackonthequestionnaires.Subsequently, interviewswereheldwiththeChairmenoftheBoardandNRCtoobtainmorein-depthanalysis of the results, while discussing the detailed BEEresults with them. A summarised report was presented totheBoardinFebruarywithananalysisofthepreviousyears’resultstoenabletheBoardtoidentifyareasforimprovementinlinewiththeBPIP.

ResultsrevealedthattheBoardhadperformeddemonstrablywell, with most of the areas being rated as ‘Good’ or‘Outstanding’. Overall, the average ratings for most of theareasevaluatedhadeitherimprovedorremainedthesameasin2011,indicatingtheDirectors’satisfactionwiththeBoard’soverallperformance.

The Board continued to perform commendably in 2012. Anumberofissueshighlightedin2011receivedappropriateBoardfocusandattention,leadingtotheirsatisfactoryresolution.

Continuous monitoring of Human Capital and Succession Planning issues

“Open” matters/areasthat the Board should focus

on in 2013 for continuousimprovement

1

Continuous monitoring of HSBB Progress (eg itsimplementation, take-up ratesand monetisation plans)

2

Continuous monitoring of Quality of Service - CustomerService, Marketing/Brand Awareness

3Continuous focus onQuality of Internal Control

for better compliance and implementation

Continuous focus onStrategic and

Inorganic Growth

4

5

Chart 1 – 2012 Focus Areas for Continuous Improvement

The Board Committee evaluation was fairly consistent withthe 2011 ratings. All Board Committees were rated ‘Good’to ‘Outstanding’, indicating that Committee members haveperformedeffectivelyasagroup.

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TheobjectiveoftheSelfandPeerEvaluationistoassesseachDirector’s attributes, personality and quality traits. Hence,each Director will be provided with the results of the self-evaluationmarkedagainstpeerevaluationforcomparisonandremedialaction.Directors’Peerevaluationresultscontinuedtobehigh in2012, indicatinghealthyBoarddynamicsandacollectivelystrongBoard.

TheBoardwillremainfocusedonthefollowingstrategicareasin2013tomaintainTM’scompetitiveedge:

1

23

4

HSBB - Competition and monestisation of fibre issues

Strategic focus areas in 2013

Branding/Brand AwarenessMeeting the Customers’Expectations

Inorganic initiatives andplans

Succession Planning

Chart 2 – 2013 Strategic Focus Areas

Directors’ RemunerationThe Board ensures that the Group’s remuneration policyremains competitive to attract and retain Directors whopossessthenecessaryskillsandexperiencecommensuratewiththeirresponsibilitiesfortheeffectivemanagementofTMGroup.Thepolicyandframeworkfortheoverallremunerationof the Executive and Non-Executive Directors (NEDs) arereviewedagainstmarketpracticesbytheNRC,followingwhichrecommendationsaresubmittedtotheBoardforapproval.

The remuneration package for Executive Directors isbalancedbetweenfixedandperformance-linkedelements.AsExecutiveDirectors,theGroupCEOandGroupCFOarepaidsalaries, allowances, bonuses and other perquisite benefitsasappropriatetoTopManagement.AsignificantportionoftheExecutive Directors’ compensation package has been madevariableinnaturedependingontheCompany’sperformance

duringthe financialyear,which isdeterminedbasedontheindividualKPIs.These, in turn,arealignedwithTMGroup’sBalanced Scorecard and long-term creation of shareholderwealth.TheExecutiveDirectorsarenotpaidDirector’sfeesormeetingallowancesforBoardandBoardCommitteemeetingsthattheyattendandaremembersof.

The performance of each Executive Director (as well asthat of Management members in pivotal positions and theCompany Secretary) is also reviewed annually by the NRC,and recommendations submitted to the Board on specificadjustmentsintheirremunerationand/orrewardpayments,reflecting their contributions for the year. The Group CEOandManagementteammembersarerewardedaccordingtohowwelltheyhaveachievedtheirKPIs,theleadershiprolesthey play and their 360-Degree ratings. These rewards arecompetitive, in line with the Group’s corporate objectives,culture and strategy. The Executive Directors acknowledgetheneedtoexcusethemselvesfromNRCandBoardmeetingsduring deliberations on their performance rewards andremunerationreview.

The Board had in March 2012 approved a new Long-TermIncentivePlan forExecutiveDirectorsandTopManagementunder the TM Rewards Transformation initiatives with themainobjectiveofaligningtheinterestoftheTopManagementwith the shareholders, driving a high-performance cultureand as a retention tool towards the creation of shareholderwealth.

Aspartofcontinuouseffortstoenhancegreatertransparencyto the public, TM announced its Headline KPIs for 2013 to2015 in February 2013. These have been set and agreed bytheBoardandManagementunderthebroaderKPIframeworkthatTMhasinplace,asprescribedbytheGLCTransformationProgramme.

The determination of remuneration packages for NEDsincluding the NINE Chairman, is a matter for the Board asawhole.The remunerationofNEDs isbasedonastandardfixedfee.Meetingallowancesarepaidbasedonthenumberofmeetingsattendedduringtheyear.NEDsarenotentitledto participate in any employees share scheme or variableperformance-linked incentive scheme pursuant to the BlueBook to maintain appropriate checks and balances. Theyare, however, entitled to other allowances such as annualoverseas business development trips, reimbursement onbusinessequipmentandtelecommunicationsbillsaswellasinsuranceandmedicalcoverage.

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TheDirectors’aggregate remunerationduring the financial year,distinguishingbetween theExecutiveDirectorsandNEDs(includingAlternateDirectors),isasfollows:

ItemExecutive Directors

(RM)TM Subsidiaries

Total (RM)NEDs (RM)

Fees – 1,923,000.00* 267,034.50 2,190,034.50Allowances 120,000.00# 342,000.00 35,800.00 497,800.00SalariesandotherRemuneration 3,561,265.00 – – 3,561,265.00Benefits-in-kind 116,329.53 466,356.00 – 582,685.53

Total: 3,797,594.53 2,731,356.00 302,834.50 6,831,785.03

Notes: * Subject to Shareholders' approval # Car allowance in lieu of provision of Company Car

ThenumberofDirectorswhoseremunerationfallsunderthefollowingbandsisasfollows:

Range of Remuneration Executive Directors (RM) NEDs (RM) Total Directors

BelowRM150,000 – 2 2RM150,000toRM250,000 – 1 1RM250,001toRM500,000 – 8 8RM500,001toRM1,500,000 1 1 2RM1,500,001toRM2,500,000 1 – 1

Total: 2 12 14

TheBoardisoftheviewthatnon-disclosureofremunerationofindividualExecutiveDirectorsandNEDswillnotsignificantlyaffect the understanding and evaluation of TM Group’sgovernance,hencebanddisclosuresareprovided,inlinewithprovisionsundertheMainLR.

A holistic review of the Directors’ fees and allowanceswas undertaken in 2012 and early 2013 to ascertain thecompetitiveness of TM’s current NEDs remunerationframework, given TM’s business complexity, Board’s roles,expertise and intensity of work. An external consultant wasengaged to provide objective advice to the Board, manageany potential conflict of interests and to preserve integrityof the independent advice. The remuneration of NEDs wasbenchmarked against selected peer companies, Malaysianlistedcompaniesandregionaltelecommunicationscompanies.

Basedontheabovestudy,TMBoardisrecommendingareviewof the existing Directors’ fees for the financial year ended31December2012toreflecttheincreaseinresponsibilitiesoftheChairmanandNEDs,aswellastheSID,forshareholders'approval. The Board opined that it is timely to revise theDirectors’feessinceitwaslastreviewedin2008.ThereviewofBoard’scompensationandremunerationisalsoproposedinviewoftheactiveengagementoftheBoardduetotherapidchanging business environment and challenges faced byTMGroup.

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Theproposedreviewwhichissubjecttoshareholders'approvalareasfollows:

Description Existing Retainer Fee (RM) Proposed Retainer Fee (RM)

Board Non-ExecutiveChairman–RM156,000perannum Non-ExecutiveChairman–RM276,000perannumNED–RM120,000perannum NED–RM180,000perannum

SID Nil RM27,000perannum

Directors’ IndemnityTM maintained a Directors’ and Officers’ Liability Insurancethroughout the financial year. Directors and Officers areindemnified against any liability incurred by them in thedischargeoftheirdutieswhileholdingofficeasDirectorsandOfficers of the Company. The insurance does not, however,providecoverageintheeventofanynegligence,fraud,breachofdutyorbreachoftrust.TheDirectorscontributejointlytothepremiumpaymentofthispolicy.

BOARD COMMITTEESThe Board has established six Board Committees to assistin discharging its duties. Delegation of responsibilities ofthe Board to its Committees is made in accordance withArticle118oftheCompany’sAA.AllBoardCommitteeshavewritten ToR, operating procedures and authority delegatedandapprovedbytheBoard,whicharereviewedfromtimetotimetoensuretheyarerelevantandup-to-date.TheToRoftheBoardCommitteesisaccessibleintheCompany’sofficialwebsite.

TheBoardCommitteesinTMareasfollows:• NominationandRemunerationCommittee• AuditCommittee• RiskCommittee• TenderCommittee• InvestmentCommittee• DisputeResolutionCommittee

TheproceedingsanddeliberationsofBoardCommitteesarereportedtotheBoardateveryBoardmeetingbytheChairmenofthevariousBoardCommittees.OnmattersreservedfortheBoardandwheretheBoardCommitteeshavenoauthoritytomake decisions, recommendations are highlighted in theirrespective reports together with the Committee members’commentsandviewsfortheBoardofDirectors’deliberationandendorsement.

Board Nomination and Remuneration Committee (NRC)TMhasacombinedNominationCommitteeandRemunerationCommittee for the purpose of expediency, as the samemembers are entrusted with the functions for both theNominationandRemunerationCommittees.MembersoftheNRCaremindfuloftheirdualroles,whichareclearlyreflectedanddemarcatedintheagendasofeachmeeting.

Membership

• TunkuDato’MahmoodFawzyTunkuMuhiyiddin(Chairman/NINED)

• Dato’DanapalanT.PVinggrasalam(Member/SID)• Dato’IrAbdulRahimAbuBakar(Member/INED)• IbrahimMarsidi(Member/INED)

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The NRC comprises exclusively of NEDs, with 75% of itsmembers being independent. The chairmanship of NRCremainsunchangedastheBoard,basedontheBEEfindings,is pleased to note that the NRC has performed effectivelyand satisfactorily under the chairmanship of Tunku Dato’Mahmood Fawzy. The Chairman was selected based onagreed processes taking into consideration the skills andexperiencesrequired.Further, inlinewiththeGreenBook’srecommendation, as a nominee from a Government LinkedInvestmentCompanyrepresentedontheCommittee,heistoensurealignment intheevaluationofexistingDirectorsandselectionofnewDirectorswiththeCompany’srequirements.TheBoardisalsorequiredtoendorsethefinaldecisionsoftheNRC,andassuchproperchecksandbalancesareinplace.

Meetings of NRC

NRC had three meetings during the financial year 2012.Besides the said meetings, urgent decisions were approvedviathreeNRCCircularResolutionsduringtheyear.

AttendanceofNRCmembersaredepictedinpage94ofthisannualreport.

Authority

• In carrying out its duties and responsibilities, the NRChas full, free and unrestricted access to TM’s records,properties and personnel. The NRC shall report itsrecommendationstotheBoardforitsconsiderationandapproval.

• NRC may use the services of professional recruitmentfirms to source for the right candidate for directorshipor seek independent professional advice whenevernecessary and may obtain the advice of externalconsultants on the appropriateness of remunerationpackagesandotheremploymentconditionsifrequired.

The NRC is governed by its own ToR. Subsequent to therecommendationsinMCCG2012, itsToRwerereviewedanddeliberatedatlengthbytheNRCandtheBoard.

Board Diversity

In respect of gender diversity, both the NRC and the Boardacknowledge the need to enhance Board diversity as it iscriticaltotheefficientfunctioningoftheBoardandindicatesgoodgovernancepractices.Nonetheless,theBoardbelievesthe appointment of new members is already guided by

the skills-set, experience, competency, and knowledge ofthe individual candidate with gender diversity forming aparamount consideration in the selection of the potentialcandidate.

TheBoardshallendeavour toattaindiversification in termsofexperience,skills,competencies,race,gender,cultureandnationality toenable theCompany tomaximise itsbusinessandgovernanceperformance.

TheGroup’sapproachtoensureBoarddiversityisasfollows:(i) recruiting from a diverse pool of candidates for the

positionofDirector;(ii) reviewing succession plans to ensure an appropriate

focusondiversity;(iii) identifying specific factors to take account of in the

recruitment and selection processes to encouragediversity;and

(iv) developing programmes to develop a broader pool ofskilledandexperiencedBoardcandidates.

The above approach does not impose on TM Group and itsDirectors any obligation to engage in, or justification forengaging in, any conduct which is illegal or contrary toany anti-discrimination or equal employment opportunitylegislationorlaws.

Currently, thereare threewomenDirectorson theBoardofTM,namelyaNINED,anINEDandaNINEAlternateDirector.TheINEDwasselectedbasedonthemixofskills,experienceandindependenceattributesasshowninherperformanceasChairmanoftheBoardTenderCommittee.

Directors' Independence

TheindependenceofallDirectorsofTM,includingtheNEDs,is annually reviewed. The Board via the NRC undertakesthe independence assessment via the BEE taking intoaccounttheirskills,experienceandcontributionsaswellastheir background, economic and family relationships, andthereafterdetermineswhethertheDirectorscancontinuetobringindependentandobjectivejudgmenttotheBoard.TheNRC shall also determine whether there are relationshipsorcircumstanceswhichcouldaffect,orappeartoaffect,theIndependentDirectors’judgment.TheDirectorswilllosetheirindependencestatus if theydonotsatisfy the independencecriteriaunderthedefinitionofindependenceinParagraph1.1oftheMainLRoranyamendmentthereto.

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Tenure is not part of the independence assessment criteriaas the Board is of the view that the fiduciary duties ofDirectors as promulgated in the Act are paramount for allDirectors,irrespectiveoftheirstatus.TheabilityofaDirectorto serve effectively is very much dependent on his calibre,qualifications,experienceandpersonalqualities,particularlyhis integrity and objectivity. The Directors’ Peer Evaluationresults from the BEE exercise would also indicate theIndependentDirectors’abilityorinabilitytoactindependently.Furthermore, the Board agrees that there are significantadvantagestobegainedfromlong-servingDirectorswhonotonlypossesstremendousinsightbutalsoin-depthknowledgeof the Company’s business and affairs. The Directors areenthusiasticandpassionateaboutspearheadingtheCompanyto the next level. The Board also noted that none of itsmembershadreachedthenine-yearcumulativeterminTM.

Having departed from the recommendation to restrict thelimitof the IndependentDirector’s tenure tonineyears, theBoardbelievestherequirementforshareholders'approvaltoretaintheindependentstatusofIndependentDirectorsofnineyearsontheBoardisthereforeimmaterial.

The NRC assumes the task of assessing the independentstatusoftheIndependentDirectorsuponappointmentandonanannualbasis.

Board Appointment Process

Otherthanthenewrequirements,theCompanymaintainsaformalandtransparentprocedurefortheappointmentofnewDirectors. Appointment to the Board is made either by theMinisterofFinanceIncorporated(MoFInc),beingtheSpecialShareholderpursuanttoArticle109oftheCompany’sAA,orbytheBoardofDirectorspursuanttoArticle98(1)oftheAA.

All nominees to the Board are first considered by the NRC,takingintoaccountthemixofskills,competencies,experienceand other qualities required to manage a highly regulatedcommunicationsbusiness,before theyare recommended totheBoard.

While the Board is responsible for the appointment of newDirectors, the NRC is delegated the role of screening andconducting an initial selection, which includes an externalsearch,beforemakingarecommendationto theBoard.The

NRCevaluatesthenominees’abilitytodischargetheirdutiesandresponsibilitiesbeforerecommendingtheirappointmentasDirectorstotheBoardforapproval.

During the year, the Board approved the appointment ofNik Rizal Kamil Tan Sri Nik Ibrahim Kamil as an AlternateDirectortoTunkuDato’MahmoodFawzyTunkuMuhiyiddinon29November2012.

Directors’ Retirement, Re-Appointment and Re-Election

In accordance with the Main LR and Article 103 of theCompany’sAA,allDirectors,includingtheExecutiveDirectors,aresubjecttore-electionbyrotationatleastonceeverythreeyearsandare-electionofDirectorstakesplaceateachAnnualGeneralMeeting (AGM).According toArticle98(2)of theAAandtheAct,DirectorsappointedtofillcasualvacanciesshallholdofficeonlyuntilthefollowingAGMandshallbeeligibleforre-election.

The re-appointment and re-election of Directors at theAGM are subject to prior assessment by the NRC and theaffectedDirectorsarerequiredtogivetheirconsentontheirreappointment and re-election prior to TM Board meeting.In assessing the suitability of candidates, NRC takes intoconsideration the attributes, competencies, commitment,personalityandqualityaspects,contributionandperformanceoftheDirectorsbasedontheBEE.AssessmentoftheBoard’sstructure and balance as well as the concerned Directors’independence is also made. NRC’s recommendations arethereafter submitted to the Board and shareholders forapproval.

Dato’ Danapalan T.P Vinggrasalam, TM’s SID, who hasattained theageof70years,shall retireat the forthcoming28th AGM pursuant to Section 129(6) of the Act and his re-appointmentissubjecttotheapprovalofnotlessthanthree-fourthsoftheshareholdersattendingtheAGM.Ifappointed,Dato’ Danapalan shall hold office until the next AGM ofthe Company and henceforth his re-appointment shall bedecidedateveryAGM.TheNRCandBoardrecommendedthere-appointment of Dato’ Danapalan based on his continuedinvaluablecontributionstotheBoardandtheGroup,inlightofhiswideexperienceasaformerregulator.HehasalsoshownfullcommitmentinhisresponsibilityasSID,keepingapulseonstakeholders’concernsintheCompany.

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FouroutofsixDirectorswhoareofequalsenioritybasedontheirappointmentdateandpreviousre-electionsshallretireattheforthcomingAGM.PursuanttoArticle104(2)oftheAA,theyhaveagreedamongthemselvesonthere-electionlistandprovidedtheirconsenttobere-electedfortheensuingyear.

Datuk Bazlan Osman, the Group CFO, is recommended forre-election by the NRC and Board. The Board opined thathisexemplarydedication tohis responsibilitiescanbeseenin the Company’s strengthening financial performance yearon year. Datuk Bazlan also acts as the conduit betweenthe shareholders, employees and the Management andprovides unstinting support to the Group CEO’s initiativesin implementing relevant strategies to move the Companyforward and in strengthening the Company’s credibility andreputationwithinthefinancialcommunity.

TunkuDato’MahmoodFawzy’sdiverselocalandinternationalexperiencehasequippedhimwithawideandmulti-facetedviewsandunderstandingofthebusiness.Ithasprovidedhimwithadistinctiveoutlookanduniqueperspectiveondiversecorporatematters,henceaddingtoahealthyBoarddiversity.TheBoardalsoacknowledgesTunkuDato’MahmoodFawzy’sstrongcommitment to theCompany,beingChairmanof theNRCandBRC,andamemberoftheBAC,BTCandBIC,andrecommends his re-election for his continuous invaluablecontributionstotheCompany.

Dato’ Ir Abdul Rahim Abu Bakar’s experience in variouscompaniesandcapacitiessuittheCompany’srequiredmixofskillsandBoarddiversity.Hisstrongopinionsandinestimableinsightintobusinessarerequisitesenablinghisappointmentontheboardsoflistedcompanies.Dato’IrRahimispracticalinhisanalysisandassessment,vocalinhisoutlookandviewsandhasprovidedtheBoardwithastrongandprincipledvoice.TheBoardwasoftheopinionthatDato’IrRahim’scontributiontotheCompanyisincalculableandessentialtotheBoardmix,thus recommended thathebe re-electedasDirectorat theforthcomingAGM.

Ibrahim Marsidi has vast experience in the management ofcompanies, and in-depth knowledge of every aspect of thebusiness.Heisnowapplyinghisexpertiseandpracticalknow-howtotheCompany.Hisviewsandapproachonoperationalmatters,particularly inregardtosalesandmarketing,haveassistedtheBoardingeneralandprovidedspecificguidancetotheManagementinparticular.TheNRCandtheBoardwereoftheopinionthatIbrahimisessentialtotheBoarddynamicsandrecommendedhimforre-election.

The above-named five Directors who are due forre-appointment and re-election at the forthcoming AGM, asevaluatedbytheNRCandapprovedbytheBoard,havemettheBoard’sexpectationsandcontinuedtoperforminanexemplarymannerasdemonstratedbytheircontributionstotheBoard’sdeliberations. Hence, the Board has recommended themfor re-election. Further to the above, Dato' Fauziah Yaacob,aNINED,whowasnewlyappointed,shallretirepursuanttoArticle98(2)oftheCompany'sAA.

Particulars of Directors standing for re-appointment andre-election are stated in the Statement Accompanying theNoticeofTM’s28thAGM.

Summary of Main Activities in 2012

Duringtheyear,theNRCfulfilledanumberofkeyactivities,aslistedbelow:

a) Nomination Function ConsideredandmaderecommendationstotheBoardon

thefollowingmatters:• Re-appointmentandre-electionofDirectorsatthe

27thAGM.• Appointment of Directors and Alternate Directors

ontheboardofmajoroperatingcompanies.• Renewal of employment contract of a Senior

Managementmemberinapivotalposition.• NominationofanAlternateDirectoronTMBoard.

b) Remuneration Function ConsideredandmaderecommendationstotheBoardon

thefollowingmatters:• Review of remuneration and benefits for the

DirectorsincludingAlternateDirectors.• 2011 performance evaluation of the Executive

Directors, Senior Management in pivotal positionsaswellas theCompanySecretaryagainstpre-setKPIs.

• BoardMeritAward2011forGroupCEO.• Rewards Transformation Matrix for Executives of

theCompany.• Revision to the Long-Term Incentive Plan for

Executive Directors and Senior Managementmembers.

• Re-computationofShareAppreciationRightsforaSeniorManagement.

• TMOrganisationRe-Alignment2013.

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The Company’s remuneration policy has been throughseveral revisions since its establishment. The Board’sremunerationpackagehasalsobeenrevisedfromtimeto time on an annual basis mainly involving benefitsentitlement.TherevisiontotheNEDs’feesissubjecttotheapprovalofshareholders,andifapproved,willtakeeffectfrom1January2012.Theproposednewpackage,if approved, is to compensate the NEDs upon takinginto consideration their expertise and contributionsinviewof thecomplexityof the industryand increasedresponsibilities.Atthesametime,theNRCalsoensuresthatthepackageisabletoattractcompetentandtalentedDirectorstotheBoard.

c) Board Matters• Considered and made recommendations to the

BoardontheimplementationandscopeoftheBEEassessmentfor2012.

• MonitoredcloselythestatusofDirectors’trainingateachNRCmeeting.

• ReviewedtheEmployeeProductivityEnhancementprogramme and was updated on its progress ateachmeetingheldduringtheyear.

• Monitored closely observance of the minimumattendance requirement at Board meetings heldduringthefinancialyear.

Board Audit Committee (BAC)IncompliancewiththeMainLRandMCCG2012andinadditionto the duties and responsibilities set out under its ToR, theBACassiststheBoardbyprovidinganobjectivenon-executivereview of the effectiveness and efficiency of the internalcontrolandgovernanceprocessesofTMGroup.

Membership

• QuahPohKeat(Chairman/INED)• Dato’DanapalanT.PVinggrasalam(Member/SID)• TunkuDato’MahmoodFawzyTunkuMuhiyiddin(Member/

NINED)• IbrahimMarsidi(Member/INED)

The BAC report detailing its membership, number andattendanceofeachmemberattheBACmeetings,summaryofitskeyfunctionsandprincipalactivities,aswellastraininginthefinancialyear2012issetoutonpages121to127ofthisannualreport.Inaddition,theStatementonInternalAuditissetoutonpages128to131ofthisannualreport.

Board Risk Committee (BRC)BRC was established to support improvements in themanagementandmonitoringof theGroup’sriskprofileandrelated corporate governance practices. This resulted in amore integratedandstructuredapproachinmanagingrisksinherentinvariousaspectsofthebusiness.

Membership

• Tunku Dato’ Mahmood Fawzy Tunku Muhiyiddin(Chairman/NINED)

• DatukBazlanOsman(Member/NIED)• Dato’IrAbdulRahimAbuBakar (Member/INED)• Dato’DanapalanT.PVinggrasalam(Member/SID)• IbrahimMarsidi(Member/INED)

A detailed BRC report detailing its membership, ToR,attendanceofeachmemberattheBRCmeetingsheldduring2012togetherwiththeRiskManagementReportoftheGroup,issetoutonpages132to135ofthisannualreport.

Board Tender Committee (BTC)Membership

• DatukZalekhaHassan(Chairperson/INED)• Dato’SriZamzamzairaniMohdIsa(Member/NIED)• DatukBazlanOsman(Member/NIED)• Dato’ Fauziah Yaacob (Member/NINED) (Appointed on

4 March 2013]• TunkuDato’MahmoodFawzyTunkuMuhiyiddin(Member/

NINED)• YBDatukNurJazlanTanSriMohamed(Member/INED)• EshahMeorSuleiman(Alternate Member/NINE Alternate

Director)• Dato’ Mat Noor Nawi (Member/NINED) (Resigned on

28 February 2013)

Meetings of BTC

BTC held eight meetings during the financial year 2012.TM Chief Procurement Officer (CPO) and Chief Technologyand InnovationOfficer (CTIO)attended theBTCmeetingsaspermanentinvitees.TheManagementEvaluationCommitteememberswerealsoinvitedtobrieftheBTConspecificissuesasandwhenrequired.

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Main Activities in 2012

During the year, the BTC deliberated on, inter alia, theprocurement status summary, procurement plan andperformanceyear-to-dateaswellasprocurementproposalswithintheauthoritylimitofBTC.Significantmattersreservedfor Board’s approval and procurement proposals within theauthoritylimitofTMBoardweretabledatBoardMeetings.

BTCalsoactivelydeliberatedonidentifiedprocurementissuesand proposed further process improvement in order to bemoretransparent,adoptingbestpracticesandstrengtheningtheprocurementgovernance.

Board Investment Committee (BIC)BICwasestablishedtoassisttheManagementinevaluatinginvestment and/or divestment related proposals forrecommendationtotheBoard.

Membership

• Dato’IrAbdulRahimAbuBakar(Chairman/INED)• DatukBazlanOsman(Member/NIED)• Dato’ Fauziah Yaacob (Member/NINED) (Appointed on

4 March 2013]• TunkuDato’MahmoodFawzyTunkuMuhiyiddin(Member/

NINED)• QuahPohKeat(Member/INED)• EshahMeorSuleiman(Alternate Member/NINE Alternate

Director)• Dato’ Mat Noor Nawi (Member/NINED) (Resigned on

28 February 2013)

Meetings of BIC

No BIC meeting was held during the year. However, urgentdecisionsweremadeviatwoBICCircularResolutionsandthedecisions/recommendations therein were duly discussed bytheBoard.

Main Activities in 2012

Duringtheyear,theBICconsideredafewstrategicproposalswhich were in line with market developments and strategicdirectionsofTM.

Board Dispute Resolution Committee (BDRC)BDRCistaskedtodeliberateonmajorandmateriallitigationcasesandmakesrecommendationsthereoftotheBoard.

Membership

• Dato’SriDrHalimShafie(Chairman/NINED)• DatukBazlanOsman(Member/NIED)• Dato’DanapalanT.PVinggrasalam(Member/SID)• IbrahimMarsidi(Member/INED)• IdrusIsmail(Ex-officio Member)

Meetings of BDRC

Nomeetingwasheldduringtheyear.

MANAGEMENT COMMITTEES AND SUB-MANAGEMENT COMMITTEESThe Board has established two main managementcommittees, namely the Management Committee and theGroupLeadershipTeam,chairedbytheGroupCEO,tooverseeandmonitortheCompany’soperations.

Management Committee (MC)SalienttermsofreferenceoftheMCareasfollows:• Formulate Group-level key business strategies and

policies,includingactionplans.• Review, guide and facilitate policy-related matters for

the Group, not limited to investments, divestments,enterprise business management, regulatory andfinancialpolicies.

• Provide strategic direction and recommend a policyframework for TM Group human capital managementmatterstotheBoard,includingtalentmanagementandsuccessionplanning.

• Discuss,reviewandrecommendtotheBoardchangestotheGroup’scompensationandbenefits.

• PrepareandrecommendtheGroupBusinessPlantotheBoard.

• Discuss matters that have been delegated by theBoard and Board Committees for further review andrecommendation.

Group Leadership Team (GLT)GLTistasked,amongothers,to:• ReviewtheoverallmonthlybusinessperformanceofTM

Group.• Discuss, deliberate and challenge the performance

improvementreportsofTMGroupandLOBs.• Discuss and review key business priorities and

operationalissuesofTMGroup.

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Sub-Management Committees Thefollowingsub-committeeshavealsobeensetuptoassisttheExecutiveDirectorsandkeyManagementmembersintheadministrationandsupervisionoftheCompany’sday-to-daybusiness.Business Continuity Management Steering Committee (BCMSC)

BCMSCwasestablishedinMarch2012andischairedbytheGroupCEO.Itistheprimarydecision-makingplatformforTMBusinessContinuityManagementandhasoversightofBCMprogrammesinTMGroup.

Customer-Centricity Steering Committee (CCSC)

CCSCwasestablishedinNovember2009andischairedbytheGroupCFOwiththeobjectiveofimprovingTM’sTRI*MIndexandachievingcustomerservicechartergoals.

Group Technical Investment Committee (GTIC)

GTICwasestablishedinJune2012andischairedbytheCTIOwiththeaimofaddressingfragmentedtechnicalinvestmentissues and ensure alignment and optimisation of technicalinvestmentacrosstheGroup.

Finance Committee (FC)

FCwasestablishedinJuly2009andischairedbytheGroupCFO. It is a platform to review and deliberate on financialmatterspertainingtoinvestmentandbudgets,andresolvekeyfinancial and operational issues. Specific matters requiringtheBoard’sdecisionare tabled toMC forprior inputbeforeescalationtotheBoard.

Group Product Committee (GPC)

GPCwasestablishedin2009andactsasastrategicpointofreferenceforunresolvedcross-linebusinessandoperationalissuesrelatedtoproductandcustomersegmentation.Italsoprovides guidance and policies to ensure product synergieswithin the Group. GPC screens the business case for newproducts and identifies the leading LOB in line with GroupStrategy,avoidingconflictbetweentheLOBs.

Management Procurement Committees (MPC)

ThreeMPCswereestablished,chairedbyGroupCEO,GroupCFOandtheCPO,todeliberateonprocurementmatterswhicharesegregatedbasedonapprovedlimitsofauthority.

Group Property Committee (Property-Comm)

Property-Comm was established in December 2009 and ischaired by Group CFO, as a sub-Management Committeeto oversee TM Group’s property related matters and makerecommendations to the MC for approval by the Board, asdeemed necessary. In June 2012, the Board agreed thatany recommendation of Property-Comm should be referreddirectlytoTMBoardforconsiderationandapproval.

BOARD PERFORMANCE IMPROVEMENT PROGRAMME (BPIP)TheBPIPGovernanceworkstreamwascompletedinJanuary2008, and has been enhanced throughout the years, with aview to improving the Board’s functions and structure andensuring the Board’s priorities are aligned with the GroupCEO’s mandate. Various initiatives were introduced as theBoard Operating Mode (BOM) deliverables to enhance theBoard’seffectiveness.ThesedeliverablesaremonitoredandreportedtotheBoardannually.FollowingfeedbackfromtheBoard in February, the Management will formulate a wholeyear’s plan for TM Board Meeting Priorities and Agenda fortheBoard’sapproval.

In2012,theBoardfocusedonstrategyissuesandperformancemanagement, in line with its core responsibilities. Thedistribution of actual time spent by the Board of DirectorsonvariousbroadagendatopicsatBoardMeetingsin2012isdepictedinthechartbelow:

Strategic Matters

Performance Management

HCM

Risk Management

Operations

Board Issues

Others

5%

33%

32%

7%

3%

6%

14%

Chart 3 – 2012 Board Time Spent

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BOARD TRAINING AND KNOWLEDGE ACqUISITIONAllDirectorsincludingAlternateDirectors,havesuccessfullycompletedtheMandatoryAccreditationProgramme(MAP)asprescribed by Bursa Securities, save for a newly appointedDirector whose MAP is due in July 2013. Directors arerequired to complete the MAP within four months of theirappointment. Induction briefings, which include informationon the corporate profile and activities of the Group, as wellasbusinesstargetsandgroupperformance,wereorganisedfor newly appointed Directors. Apart from the MAP, theDirectors attended other relevant training programmes andseminarsorganisedbytherelevantregulatoryauthoritiesandprofessionalbodies.

The Board of Directors continued to evaluate the trainingneeds of its Directors via the Board Training ProgrammewhichaidstheDirectorsindischargingtheirduties.

Board Training Programme (BTP)The Board has adopted the BTP Guidelines since January2005toaddressthetrainingneedsofDirectorsintheabsenceof the Bursa Securities’ CEP requirements. The move is inline with the MCCG 2012 which promotes the continuoustrainingofDirectorstoensuretheirknowledgeandskillsarekeptupdated.TheBoard’strainingstructure iscontinuouslyreviewed to be relevant to changing business needs. As aresultofclosemonitoringoftheBTPbytheNRCandinlinewiththeBEE2011results,theDirectors’trainingstructurefor2012wasalignedtotheirtrainingneedsfocusingonIndustry,Strategy/Risk,CorporateGovernanceandInvestorRelations.

In 2012, Directors attended various seminars, conferencesandinternationalconventionstogaininsightintothestateoftheeconomyaswellasthelatestregulatoryandtechnologicaldevelopmentsrelevanttotheGroup’sbusiness.BasedonananalysisconductedpursuanttotheBPIP,therewasincreasedfocusonIndustryKnowledge,CorporateGovernance,FinanceandPerformanceManagement,withtimespentonthesefourareasaccountingfor61%oftheBoard’stotaltraininghours.

TMalsoorganisedin-housetrainingforDirectors’developmentinitiatives.SitevisitswerearrangedtoTM’sHongKongDataCentre in April 2012 and PT VADS Indonesia in June 2012for the Directors to gain greater insight into TM’s overseasoperationsandbusinesses.

BasedonBTPrecords,allDirectorscompletedtheminimumrequirement of 36 training hours required for the year. TheDirectorsalsoconcurredthattheyhaddevotedsufficienttimeto update their knowledge and enhance their skills throughappropriateeducationprogrammes inorder tosustain theiractive participation in Board deliberations. The Directors’trainingstructurein2012wasasdepictedinthechartbelow.

Finance/Audit

Industry

Others

Strategy


Investor Relations

Corporate Governance

Risk

9%

21%

24%2%

11%

7%

7%

19%

Chart 4 – 2012 Directors’ Training Structure

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TM Directors attended the following conferences, seminars and training programmes in 2012 to enhance their businessexpertiseandprofessionalism:

Training Focus Conferences/Seminars & Training Programmes

Corporate Governance

• BTP:CorporateIntegrity• CorporateGovernance2012:DirectingResults-FocusedRiskManagementProgrammeto

strengthenyourEnterprise’sGovernance• NationalProcurementForumforthePublicandPrivateSector2012–EmbeddingGoodGovernance

&IntegrityintheProcurementProcess• MCCG2012:TheImplicationsandChallengestoPublicListedCompanies• NewCorporateGovernanceBlueprint&RegulatoryUpdates• 4thAnnualCorporateGovernanceSummitKualaLumpur• SocialEnterpriseGovernance–Itisdifferent• BoardEffectiveness• CorporateReporting

Strategy/Risk

• BTP:Foresight–LearningonNavigatingtheFuture• 10thInter-ParliamentaryForumonSecuritySectorGovernance(IPF-SSG)inSoutheastAsia• DirectorsForum2011:BoardRisingtotheChallengesofCorporateEntrepreneurship• BuildingaBusinessintheContextofaLifeWebinar• From1970to2022:ThePastasProloguetoForecastingtheFuture• WhatBoardsarelookingforintheYearahead• EmergingEconomies• StrategyandGrowth• CompetitionAct2010• PBBIn-HouseTraining:UnderstandingtheInternalCapitalAdequacyAssessmentProcess(ICAAP)• FinancialInstitutionsDirectors’Education(FIDE)Forum:BreakfastTalkentitledInsuranceBanana

Skins–RisksFacingInsurersandtheWayForward• ICAAPWorkshop

Industry

• CommunicAsia2012:ShapingVision,CreatingReality–TheTelcoRisingCloud:TelcoCloudOpportunity–CloudComputing:TheNextWaveTechnologyPlatforms,Infrastructure&Models

• KhazanahMegatrendsForum2012• TelecommunicationsManagementForum• NetworkedMediaContentSeminar2012–ReapingtheBenefitsofSocialMedia• RegionalEconomyOutlook• CFORoundtable–GlobalGrowthandFinancing:ChallengesandOpportunitiesforCFOsinCurrent

Markets• DiscussionwithformerRussianMinisterofTelecommunicationsonTelecommunicationstrendsin

Europe• TheDigitalRevolution:HowTechnologyisChangingtheWorld• GoldmanSachsTechnologyConference2012

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Training Focus Conferences/Seminars & Training Programmes


• MadinahInstituteforLeadershipandEntrepreneurship(MILE)ExecutiveProgramme• TMBusinessLeadersProgramme(ICLIF)2:ConnectingTheDots

Investor Relations• Non-DealIRRoadshow• CorporatePresentationLuncheon• MyanmarGlobalInvestmentsForum

Finance/Audit

• CNBCSummitMalaysia–BalancedBudgetafter2015• ModuleA:FinancialInstitutionsDirectors’EducationProgramme• ModuleB:FinancialInstitutionsDirectors’EducationProgramme• ASEANFederationofAccountantsConference2012• MIAConference2012–A-ZofAccountingforChangesinForeignExchangeRates• MalaysianFinancialReportingStandardConvergence• LaunchofPIDM2011AnnualReportandAnnualDialogue• OfficialLaunchofFIDEForum• FIDEElectiveProgramme:ICAAPProgramme• FIDEForum:RoundtableDiscussionentitledBoardofDirectors–ValueCreationvsCompliance• HowtoWorkwithPrivateEquityandVentureCapitalPortfolioCompanies• TaxIncentivesforVC/AngelInvestors• ExecutiveRemuneration• TechnicalAccountingUpdate• CFOSummit2012• AsianVentureCapitalJournal(AVCJ)PrivateEquity&VentureForum–Indonesia2012• PrivateEquitySEASummit

Others• 6thRoundtableSessionforTheFreeTradeAgreementMalaysia-EuropeanUnion• BriefingonrelatedStatutoryIssuesundertheTrans-PacificPartnershipAgreement(TPP)and

ConsultativeMeetingsonTPP

BOARD ACCESS TO INFORMATION Access to Management The Board has direct access to the Senior Managementand has unrestricted and immediate access to informationrelating to the Group’s business affairs. Reliance on thehonestyand integrityof theCompany’sSeniorManagementandexpertsinlegal,accounting,financialandotheradvisorsisnotmisplacedwhen itenablestheDirectorstoeffectivelydischargetheirduties.

RelevantandmaterialinformationisprovidedtotheBoardonaveragefivedayspriortotheBoardandCommitteemeetingsso that the Board is accorded sufficient time to appraisetheproposalsor information.TheBoardhasaccesstoseekfurtherinformationandclarificationfromtheManagementatalltimestomakeinformeddecisions.

Company Secretary All Directors have access to the advice and services of theCompanySecretary.TheChiefLegalComplianceandCompanySecretaryisresponsibleforprovidingsupportandappropriateguidancetotheBoardonpoliciesandprocedures,rulesandregulations and relevant laws in regard to the Company aswellasbestpracticesongovernance.

The Board also has access to the Meeting and DocumentManagement System, a secured electronic archival andretrievalsystemwhichstoresallproposalpapersandminutesofBoard,CommitteeandManagementCommitteemeetings.

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Access to External ExpertsAsidefromutilisingtheGroup’sinternalresources,theBoardanditsCommitteeshaveattheirdisposalaccesstoexternalinformation and expert advice by engaging independentexternalexpertsattheexpenseoftheCompany,shouldtheydeemitnecessaryinensuringperformanceoftheirduties.

During the year, independent external auditor and humanresources consultants were appointed to provide revenueaudit assurance and independent benchmarking analysis ofthereviewofDirectors’remunerationtoBACandNRC.

Industry Information Packs (Info-packs)The Board is kept updated on changes and developmentsrelatingtotheindustryviaQuarterlyInfo-packs,acompilationofsummariesofanalysts’viewsonTM,localandglobaltrends,events,competitiveintelligence,industryreports,periodicalsand localandoverseasregulatoryupdates.AsatDecember2012,atotalof27BoardInfo-packshadbeenissued.

COMMUNICATION AND INTERACTIONBoard and ManagementSenior Management members are invited to attend Boardand Committee meetings to present, report or seekrecommendations for the Board’s consideration on mattersrelating to their areas of responsibilities. Concise andcomprehensiveproposalpapersarepreparedandpresentedfortheDirectors’digestion,deliberationanddecision.

VitaldecisionsarecommunicatedtotheManagementwithinoneworkingdayof theBoardmeetingwhile theminutesofBoardMeetingsarecompletedforcommentsbytheChairmanand Executive Directors within five working days. Relevantextracts of the minutes are distributed to the Managementforactionwithinthreetofiveworkingdays,dependingontheurgencyoftheitems.

Overtheyears,thequalityofpaperspresentedtotheBoardhascontinuedtoimprovesignificantly.TheBoard’sadoptionofaratingprocessforpapersandpresentationsbyManagementhelps to provide constructive feedback to the Management.During the year, the overall average of Board ratings onthe quality of Management papers and presentations wasmaintainedatabove4.00pointsoutof5.00points.

Similarly, Management is given the opportunity to rate theBoardannually,intermsofwhetherBoarddeliberationshavebeenfocused,constructiveandsupportive,andwhethercleardecisionshavebeenarrivedatbasedonrelevantfacts.Intheyear under review, the Management’s average rating of theBoardwasmaintainedat4.00pointsoutof5.00points.

Shareholders and InvestorsThe Board recognises that a sound Investor Relations (IR)programmeisvitalinmanagingtheinterestsofshareholders,investorsandotherstakeholdersintheCompany.Continuousengagement is maintained with the investing communitythrough a planned IR programme managed by the IR UnitunderthepatronageoftheGroupCFO.

Toensurecompliancewithbestpractices,allcommunicationwiththecapitalmarketisgovernedbyourInvestorRelationsPolicy and Guidelines, guaranteeing timely and high qualitydisclosure of information to shareholders and investors inorderthattheymayformproperjudgmentsandappraisalsoftheGroupinmakinginformedinvestmentdecisions.

Inaddition,theBoardstrengthensitslinesofcommunicationwiththeinvestingcommunityandotherstakeholdersthroughtheSID.

Details of TM’s Investor Relations initiatives and activitiesduringtheyeararesetoutonpages32to34inclusive,ofthisannualreport.

Independent Directors’ DiscussionThe SID is responsible for leading confidential discussionswithotherNEDswhomayhaveconcernswhichtheybelievehavenotbeenproperlyconsideredbytheBoardasawhole.The discussions are held as and when required or deemednecessary by the SID. As such, the Board is able to pursueagreaterdegreeof independence,andNEDscanmeetandactivelyexchangeviewsintheabsenceofManagement.

Relationship with the External and Internal AuditorsThe Board maintains an appropriate relationship withthe Company’s auditors through the BAC. The power tocommunicate directly with both the external and internalauditorshasbeenexplicitlyaccordedto theBAC inorder todischargethisdutyeffectively.

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TheBACandBoardplacegreatemphasison theobjectivityand independence of the external auditor, MessrsPricewaterhouseCoopers (PwC), in providing transparentreports to the shareholders. PwC has continued to reportits opinions to shareholders of the Company, and this isincludedaspartoftheGroup’sfinancialreportswithrespecttothestatutoryauditforthefinancialyear.PwCisregularlyinvitedtoattendtheBACmeetingsapartfromthetwiceyearlydiscussions without the presence of the Management toprovidefulldisclosureoftheauditundertaken.Theexternalauditor’spresencewasalsorequestedattheCompany’sAGMtopersonallyprovideitsreporttotheshareholdersandattendtoanyissuesraisedbythem.

TheexternalandinternalauditorsareobligedtohighlighttoBACandtheBoardanymatter thatrequirestheirattention.AfullreportoutliningtheBAC’sroleandrelationshipwiththeexternalandinternalauditorsissetoutonpages124to126inclusive,ofthisannualreport.

Annual Report and Annual General Meetings (AGMs)TheannualreportisakeychannelofcommunicationbetweentheGroupanditsstakeholders.TM’sannualreportprovidesacomprehensivereportontheGroup’sdirectionandfinancialperformance, ensuring disclosure beyond the requirementsof theMainLR inpromotingbettergovernance.Theannualreports are supplemented by summarised versions as wellasCDROMs.AnonlineversionisavailableonthecorporatewebsitewhileaBahasaMalaysiaversioncanbeprovidedtoshareholdersuponrequest.

TheothersignificantavenueofcommunicationanddialoguewithshareholdersisTM’sgeneralmeetingsofshareholders,particularlyitsAGMs.AttheAGM,theGroupCEOpresentsacomprehensivereviewoftheGroup’sperformanceandvaluecreatedforshareholdersaswellascurrentdevelopmentsoftheGroup.Thisreviewissupportedbyavisualandgraphicalpresentation of the key points and financial figures. Uponconclusionof theAGM,thepresentationsareuploadedontotheCompany’swebsite.

TheCompanysupportstheMCCG2012’srecommendationofencouraging shareholder participation in general meetings.Inthisrespect,noticefortheforthcoming28thAGMhasbeenfurtherenhancedtoincludeallrelevantinformationinregardtotheshareholders’rightsatthesaidgeneralmeeting.

TheBoardshallconsidertheuseofelectronicvotingforbothshow of hands and polling, to facilitate greater shareholderparticipation taking into consideration its reliability,applicability,costandefficiency.

Active participation by TM’s shareholders and investors isencouragedduringtheAGMs.ShareholderattendanceattheAGMscontinued tobehighasevidencedby thepresenceofabout2,319shareholdersatthe27thAGMoftheCompanyheldon8May2012.Theresultsofvotingforeachresolutionarepromptly announced to the shareholders after each votingprocess.Asummaryofthevotingresultsforallresolutionsisalsopresentedfortheshareholders’information.

TheopenplatformprovidesanopportunityfortheshareholdersandinvestorstoraisequestionsonitemsontheAGMagenda.In response, the appropriate answers and/or clarificationsareprovidedbytheBoardmembers,CommitteechairmanorSenior Management of TM. A press conference is also heldimmediately after the AGM at which the Chairman, GroupCEO,GroupCFOandrelevantSeniorManagementarepresenttoclarifyandexplainissuesraisedbythemedia.

Feedback on questions raised by the Minority ShareholderWatchdog Group (MSWG) prior to the AGM is shared withall shareholders during the AGM where pertinent issues orqueries pertaining to the Company’s business have beenadequatelyaddressed.

InadditiontotheAGMs,shareholdersandmarketobserversare welcomed to raise queries at any time through GroupCorporate Communications and the IR Unit. These willsubsequently be channelled to the Directors and SeniorManagement.

Internal Corporate Disclosure Policies TheBoardhasestablishedanInternalCommunicationPolicyand Best Practices to facilitate the handling and disclosureof material information in a timely and accurate manner.The Policy, based on openness and transparency, two-waycommunication, accountability, timeliness, accuracy andsimplicity,aimstoensuretheCompany’scompliancewiththedisclosurerequirementsassetoutintheMainLRandotherrelevantlaws.TheCompanyhasalsoadoptedtheCorporateDisclosure Guidelines dated 22 September 2011 issued byBursaSecurities.

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BOARD CONDUCTConflict of Interest and Related Party Transactions (RPT)To assure accountability and prevent conflict of interest inrelation to issues that come before the Board, all Directorsare required to make written declarations on their interestin transactions at every Board meeting. Directors are alsoremindedbytheCompanySecretaryoftheirstatutorydutiesand responsibilities and are provided with updates on anychangesthereon.

TheDirectorsfurtheracknowledgethattheyarealsorequiredtoabstainfromdeliberationandvotingonrelevantresolutionsin which they have an interest at the Board or any generalmeeting convened. In the event a corporate proposal isrequiredtobeapprovedbyshareholders,interestedDirectorswillabstainfromvotinginrespectoftheirshareholdingsinTMandwillfurtherundertaketoensurethatpersonsconnectedtothemwillsimilarlyabstainfromvotingontheresolutions.

Trading on Insider InformationTM’s Directors and employees are prohibited from tradingin securities or any other kind of property based on pricesensitive information and knowledge which has not beenpubliclyannounced.

Notices on the closed period for trading in the Company’sshares are sent to Directors and principal officers on aquarterly basis specifying the timeframe during whichDirectors and the principal officers are prohibited fromdealingintheCompany’sshares.DirectorsarealsopromptednottodealintheCompany’ssharesatanypointwhenpricesensitiveinformationissharedwiththem,occasionallyintheformofBoardpapers.

Code of Business EthicsApartfromtheCompanyDirectors’CodeofEthicsissuedbythe Companies Commission of Malaysia, the Company alsohas inplaceaCodeofBusinessEthics (CBE)whichaimstoinstil, internalise and uphold the value of ‘UncompromisingIntegrity’ in the behaviour and conduct of the Board ofDirectors, Management, employees and all stakeholders oftheCompany.

Integrity PactTheIntegrityPact,adeclarationprocessmadebyemployeesand Board members involved in all levels of procurementactivities, was launched on 20 January 2012 to enhancetransparencyamongTMDirectors,employeesandsuppliersandtoguardagainstcorruptpractices.

This declaration signifies to the public that the Groupremains steadfast in upholding Anti-Corruption PrinciplesforCorporations inMalaysia,and that it isworking towardsa business environment that is free from corruption in theconductof itsbusinessand in its interactionswithbusinesspartnersandthegovernment.

WiththeimplementationofthePact,biddersforTMcontractsneedtosignanagreementwithTMinwhichallpartiespledgenottobeinvolvedinanyactivitywhichmightaffectthefinaltenderdecision.

The BTC, pursuant to TM Integrity Pact initiatives, has toexecuteaDeclarationaftereverymeeting,confirmingthatthemembershavenoconflictofinterestintheproposalstabledatthemeeting.Confidentialityofinformationisalsomaintainedthroughouttheprocurementexercise.

Both the CBE and Integrity Pact underline the Company’sintoleranceagainstcorruptpractisesanditspromotionofanopenandtransparentcorporatecultureintheGroup.

Whistleblower PolicyTheWhistleblowerPolicy,undertakenunderTM’sCBE,allowsTMGroupemployeestoreportconcernsonallegedunethicalbehaviour,actualorsuspectedfraudwithintheGroup,usingTM’s Ethics Line telephone or fax number or the EthicsWebsite. An independent committee has been establishedtoprovideasafeandconfidentialchanneltoemployeeswhoreportanymisconduct.

The identity of the whistle-blower will be kept confidentialandknownonlytoafewauthorisedpersons.TheBoardandManagementprovidetheirassurancethatemployeeswillnotbeatriskofanyformofvictimisation,retributionorretaliationfrom their superiors or any member of the Managementprovidedtheyactingoodfaithintheirreporting.

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PROMOTING SUSTAINABILITYTM manages its business responsibly by managing theeconomic,socialandenvironmentalaspectsofitsoperations.The Company produces an annual sustainability report tocommunicate its sustainability endeavours to stakeholders.Together with the annual report, which highlights thefinancial aspects of the business, both reports provide aclear, comprehensive and transparent representation of theCompany’sperformanceannually.

The sustainability report is available to the public on theCompany’sofficialwebsite.

ACCOUNTABILITY AND AUDITFinancial ReportingThe Board ensures that shareholders are presented with aclear, balanced and meaningful assessment of the Group’sfinancial performance and prospects through the auditedfinancial statements, quarterly announcement of results,Chairman’s Statement and Group CEO Statement in theannualreport.TheBoardisassistedbytheBACinoverseeingtheGroup’sfinancialreportingprocessesandthequalityofitsfinancialreporting.

Directors’ Responsibility StatementThe Directors have also provided assurance that financialstatementsprepared foreach financial yeargivea trueandfairviewofthestateofaffairsoftheCompanyandtheGroupasattheendofthefinancialyearandoftheresultsandcashflowoftheGroupforthefinancialyearasrequiredbytheAct.

TheStatementofResponsibilitybyDirectorsfortheauditedfinancialstatementsoftheCompanyandGroupisasoutlinedon page 236 of this annual report. Details of the CompanyandGroup financialstatements for the financial yearended31 December 2012 are set out on pages 237 to 383 of thisannualreport.

Internal ControlsTheestablishmentofanappropriatecontrolenvironmentandcontrolframeworkaswellasforreviewingitseffectiveness,adequacy and integrity is evidence of the Board’s overallresponsibility for the Group’s system of internal controls. Itis designed to manage the risk of non-achievement of theGroup’sobjectivesandprovidesadequateassuranceagainsttheoccurrenceofanymaterialmisstatementorloss.

TheDirectors’StatementonRiskManagementand InternalControl, which provides an overview of the state of internalcontrolswithintheGroup,isenumeratedonpages112to120ofthisannualreport.

COMPLIANCE STATEMENTPursuant to Paragraph 15.25 of the Main LR, the Board ispleasedtoreportthatthisStatementonCorporateGovernanceprovidesthecorporategovernancepracticesoftheCompanywith reference to the MCCG 2012. TM has fully applied thebroad Principles set out in the Code. The Board, however,has reserved several of the Recommendations and theirCommentariesandhasrationalisedandprovidedjustificationsfor the deviations in this Statement. Nevertheless, TM willcontinuetostrengthenitsgovernancepracticestosafeguardthebestinterestsofitsshareholdersandotherstakeholders.

This Statement, together with the Directors’ Statement onRisk Management and Internal Control, BAC Report andBRCReport,setsoutthemannerinwhichtheCompanyhasappliedthePrinciplesasprescribedintheMCCG2012.

This Statement on Corporate Governance is made inaccordancewiththeresolutionoftheBoardofDirectorsdulypassedon25March2013.

Dato’ Sri Dr Halim ShafieChairman

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RESPONSIBILITY AND ACCOUNTABILITYThe Board is responsible for overseeing the Group’s riskmanagement and internal control systems, while theManagement is responsible for implementing the Board’spolicies and procedures on risk and control. Managementidentifiesandassessestherisksfacedaswellasthedesign,operation and monitoring of suitable internal controlsto mitigate and control these risks. The systems includegovernance,organisationalstructure,strategicplanning,riskmanagement, financial management, project management,operational control, regulatory and compliance controls tosafeguard shareholders’ investments, customers’ interestsandtheGroup’sassets.

The Board recognises and affirms its overall responsibilityfortheGroup’ssystemofinternalcontrol,whichincludestheestablishmentofanappropriateriskmanagementandcontrolframeworkaswellasthereviewofitseffectiveness,adequacyandintegrity.Thesystemsaredesignedtomanageratherthaneliminate the risk of failure to achieve business objectivesandcanprovideonlyreasonable,andnotabsoluteassuranceagainst material financial misstatement or loss. There aretwo committees at the Board level that have primary riskmanagementandinternalcontroloversightresponsibilities:

• TheBoardRiskCommittee (BRC)–withoversightoverriskmanagement

• TheBoardAuditCommittee(BAC)–withoversightoverinternal control systems, financials and governancematters

RISK MANAGEMENT FRAMEWORKTM Group has in place an Enterprise Risk Managementframework and processes for identifying, evaluating andmanagingsignificant risks facedby theGroupbasedonMSISO31000standards.TheresponsibilitiesoftheBoardforthegovernanceofriskandcontrolsinclude:• Settingthetoneandcultureforeffectiveriskmanagement

andinternalcontrol;• EmbeddingriskmanagementinallaspectsofTMGroup’s

dailybusinessandoperationalactivitiesandprocesses;• ApprovingtheBoard’sacceptableriskappetite;and• Reviewing theriskmanagement framework,processes

and responsibilities, and ensuring they providereasonable assurance that risks are managed withintolerablelevels.

Riskassessmentandevaluationare integral toTM’sannualstrategic planning and day-to-day operations. There is adetailed risk management process, culminating in a Boardreview, which identifies the key risks facing the Group andeach business unit. This information is reviewed by SeniorManagement as part of the strategic review and periodicalbusiness performance process. Enterprise-wide riskmanagementcomprisesthefollowingprocedures:• Documentationoffinancialmanagementproceduresand

guidelines;• ReviewbySeniorManagementoftheGroup’skeyrisksand

thecreationofaGroupriskregisterdescribingtherisks,residual risk rating; and a review of the execution andmanagementoftheriskmitigationstrategiesbyowners.ThesearereviewedbytheManagementCommitteeandsubsequentlybytheBoardRiskCommitteebeforebeingreviewedandapprovedbytheBoard;

• ContinuingassessmentsbytheGroup’sinternalauditorson the quality of risk management and control, andthe report to the Management and the Board AuditCommitteeonthestatusofspecificareasidentifiedforimprovement;and

• AssessmentbytheBoardRiskCommittee,onbehalfoftheBoard,ontheeffectivenessoftheriskmanagementprocessintheGroupduringthefinancialyear.

DiReCTORSSTaTeMenT OnRiSK ManaGeMenT& inTeRnaL COnTROL

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FurtherinformationonTM’sRiskManagementisprovidedonpages112to119oftheannualreport.

INTERNAL CONTROL FRAMEWORKTheBoardacknowledgesthatthesystemofinternalcontrolisdesignedtomanage,ratherthaneliminaterisksthathindertheGroupfromachievingitsgoalsandobjectives.Itthereforeprovidesreasonable,andnotabsoluteassuranceagainsttheoccurrenceofanymaterialmisstatementofmanagementandfinancial informationandrecordsoragainstfinancial lossesor fraud. The internal control system is intertwined withthe Group’s operating activities and exists for fundamentalbusinessreasons.

ThesystemandframeworkofinternalcontrolarebasedontheCommitteeoftheSponsoringOrganisationsoftheTreadwayCommission(COSO) InternalControl IntegratedFramework,a generally accepted framework for internal control. Thisprocess is reviewed regularly throughout the year by theBoard, taking into account changes in the regulatory andbusinessenvironmenttoensuretheadequacyandintegrityofthesystemofinternalcontrol.

REVIEW OF RISK MANAGEMENT AND INTERNAL CONTROL EFFECTIVENESS

The BoardIn evaluating the effectiveness of the risk oversight andinternal control of TM Group, the Board considers whetherbusiness risks have impacted or are likely to impact theGroup’s achievement of its objectives and strategies. TheBoardalsoassessestheeffectivenessoftheriskmanagementandinternalcontrolsysteminmanagingthoserisks.TheBRCandBAC,onbehalfoftheBoard,rigorously:

• reviewtheprocessesforestablishingTMGroup’sshortandlong-termobjectivesandstrategies;

• reviewtheprocessesfordeterminingandcommunicatingtheCompany’sriskappetite;

• consider the significant risks faced by TM Group andassess how they have been identified, evaluated andmanaged;

• review Management’s processes for identifying,analysing, evaluating and treating risks, as well as forcommunicatingriskandcontrol informationacrossthebusiness;

• reviewManagement’sreportingofrisktoprovidetheBoardsufficient visibility of risks across the organisation andassesstheeffectivenessofthesystemsofinternalcontrolinmanagingsignificantrisks,havingnotedanysignificantfailure or weakness in internal control which have beenreportedbytheManagementandInternalAudit;

• reviewtheprocessesimplementedbytheManagementfor monitoring risk management and internal controlto provide reasonable assurance that they continueto operate as intended and are modified as businessconditionsorriskschange;

• consider whether the Management has taken promptaction to remedy any significant failure or weakness,and whether the findings indicate the need for moreextensivemonitoringofthesystemofriskmanagementandinternalcontrol;

• considerwhetherearlywarning indicatorsare inplaceto alert the Management on potential risk eventsand whether these indicators have been effectivelycommunicatedthroughoutTMGroup;and

• evaluatetheprobabilityofemergingrisksandtheneedforappropriatecontrols.

During the annual assessment, the Board considered allissuesthathavebeendealtwithandanyadditionalinformationnecessary toensure ithad taken intoaccountallsignificantaspects of risks and internal control of TM Group up to thedateofapprovalofthestatementintheannualreport.Amongtheissuesconsideredwere:

• changesinthenatureandextentofsignificantriskssincethelastassessmentandhowTMGrouphasrespondedtochangesinitsbusinessandtheexternalenvironment;

• the effectiveness of TM Group’s risk management andinternalcontrolsystem;

• the work of its internal audit, risk management unitsand other assurance providers, including the externalauditors;

• the extent and adequacy of the communication of theresultsofthemonitoringtotheBoard;

• theincidenceofsignificantcontrolfailureorweaknessesthat were identified at any time during the period andtheirimpactonTM’sperformanceorfinancial,businessoroperationalconditions;

• eventsthathadnotbeenanticipatedbytheManagementwhichimpactedtheachievementofTM’sobjectives;and

• theadequacyandeffectivenessoftheriskmanagementandinternalcontrolpoliciesasawhole.

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Directors Statement On Risk Management & Internal Control

The Board recognises that neither risk management norinternal control processes provides absolute assurance. Itis further of the view that the processes implemented andexecutedby theManagementprovide reasonableassurancethat significant risks which impact TM’s strategies andobjectivesfortheyearended31December2012werewithinappropriate levels to TM Group’s business and which havebeenapprovedbytheBoard.

This Statement on Risk Management and Internal Control(the Statement) has been prepared in compliance with theListing Requirements of Bursa Malaysia Securities Berhadand inaccordancewith theStatementonRiskManagementandInternalControl–GuidanceforDirectorsofListedIssuers2012(SRMIC).Inmakingtheaboveassurance,statementsinwritingwereobtainedfromtheGroupChiefExecutiveOfficerand the Group Chief Financial Officer certifying that theCompany’s riskmanagementand internalcontrolsystem isoperatingadequatelyandeffectively inallmaterialaspects,basedontheriskmanagementmodeladoptedbyTMGroup.

THE MANAGEMENTManagement acknowledged that they are responsible forimplementing the processes for identifying, evaluating,monitoringandreportingrisksand internalcontrol,and fortaking appropriate and timely corrective actions as needed.The Management has further assured the Board that TM’srisk management and internal control system is operatingadequately and effectively in all material aspects, based ontheriskmanagementmodeladoptedbyTM.

TheManagementhadimplementedthenecessaryprocessesto:• identify risks relevant to TM’s business and the

achievementofitsobjectivesandstrategies;• design, implement and monitor the risk management

framework in accordance with TM Group’s strategicvisionandoverallriskappetite;and

• identifychangestorisksoremergingrisks,takeactionsasappropriate,andpromptlybringthesetotheattentionoftheBoard.

TheAuditandBusinessAssuranceCommitteesetupbytheManagement addresses and monitors any internal controlweaknessandensurescontinuousprocessimprovement.

INTERNAL AUDITTM has established an in-house independent internal auditfunction reporting to the BAC to provide an independent,objective assurance and consulting activity designed to addvalueandimproveTMGroup’soperations.IthelpsTMGrouptoachieveitsobjectivesbybringingasystematicanddisciplinedapproachtoevaluateandimprovetheeffectivenessoftheriskmanagement,controlandgovernanceprocesses.

During the financial year, the internal audit functioncontinuouslyassessedwhethertheriskswhichmayhinderTMfromachievingitsobjectiveswerebeingadequatelyevaluated,managed, monitored and mitigated. It further evaluated theeffectiveness of the governance, risk management andinternalcontrol frameworkand facilitated theenhancementofthese,whereappropriate.

Furtherinformationontheinternalauditfunctionisprovidedonpages128to131oftheannualreport.

Under the COSO Internal Control Integrated Framework,internalcontrolassessmentissegregatedintofiveinterrelatedcomponents,asfollows:

A. Control EnvironmentControl environment is the organisational structure andculture created by the Management and employees tosustain organisational support for effective internal control.It is the foundation forall theothercomponentsof internalcontrol, providing discipline and structure. Management’scommitment to establishing and maintaining effectiveinternalcontroliscascadeddownandpermeatestheGroup’scontrolenvironment,aidinginthesuccessfulimplementationofinternalcontrol.Keyactivitiesinclude:

Organisation Structure • TMGrouphasaformalorganisationstructurewithclearly

definedlinesofresponsibilityandauthoritytofacilitatequick response in the evolving business environment,effectivesupervisionofday-to-daybusinessconductandaccountabilityforoperationalperformance.

• TherolesofCentralFunctions(CorporateCentres)havebeen strengthened to guide the Lines of Business onspecificcorefunctionstrategiesandgovernance-relatedmatters.

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Assignment of Authority and Responsibility• The Group has established a Limit of Authority (LOA)

matrix that clearly outlines Management limits andapprovalauthorityacrossvariouskeyprocessessuchasCapitalStructure,MergersandAcquisition,Procurement,Corporate Finance, Accounts Receivable and PropertyPlant and Equipment. The LOA is duly approved by theBoard and subject to regular review and enhancementto ensure it reflects changes in accountability and theGroup’sriskappetite.

• Clearaccountabilityandresponsibility forkeybusinessprocesses have been established through the Group’sBusinessProcessManualandSubsidiariesPolicy,bothapprovedbytheBoard.

Board and Audit Committees• The various Board Committees, namely the Audit

Committee, Risk Committee, Nomination andRemuneration Committee, Tender Committee,Investment Committee, Dispute Resolution Committeeand other Sub-Management Committees, are allgovernedbyclearlydefinedtermsofreference.

• The Audit Committee comprises only Non-ExecutiveDirectors and a majority of Independent Directorswith wide ranging in-depth experience from differentbackgrounds, knowledge and expertise. The AuditCommittee currently includes a Senior IndependentNon-Executive Director. Its members continue to meetregularlyandhavefullandunimpededaccesstoboththeinternalandexternalauditorsduringthefinancialyear.

Core Values • Internalisation of TM Group’s core values of Total

Commitment to Customers, Uncompromising Integrityand Respect and Care serves as a foundation of theGroup’sculture.

Code of Business Ethics• TM’s Code of Business Ethics (CBE), launched in 2004

andrevisedin2010,supportstheCompany’svisionandcore values by instilling, internalising and upholdingthevalueofUncompromisingIntegrity inthebehaviourand conduct of the Board of Directors, Management,employeesandallstakeholdersoftheCompany.

• AllExecutiveDirectors,Managementandemployeesarerequiredtodeclaretheirassetsandinterestannuallytoprovideanupdateon thevalueof individuallyor jointlyownedassets.

Integrity Pledge• TMsignedtheIntegrityPledgeon27April2011,making

a unilateral declaration that it will not commit any actof corruption; will work towards creating a businessenvironment that is free from corruption; and willuphold the Anti-Corruption Principles for Corporationsin Malaysia in the conduct of its business and in itsinteractionswithbusinesspartnersandtheGovernment.

Procurement Ethics• TM’s Procurement Ethics was formally introduced in

2006,outliningtheprinciplesandspecificrequirementsrelated to the procurement process. It supports theProcurement Red Book introduced by the Governmentand complements the TM Code of Business Ethics,which provides guidelines on dealing with employees,customers, business partners, competitors andother parties. It promotes greater transparency andaccountabilityintheprocurementprocessbyadoptingacleardisclosurepolicyandcultivatesanethicalworkingenvironmentthatreducesgraft,enablesproductstobepurchased at competitive market prices and ultimatelyimprovesprofitability.

Integrity Pact• On 20 January 2012, TM launched its Integrity Pact to

enhancetransparencyinitsprocurementapproachwhilereducing or completely eradicating corrupt practices.Theobjectivesofthepactare:ο ToensureTMwillnotincurunnecessarycostsinits

procurementactivitiesο Toavoidbiddersfromofferingorgivingbribesο ToavoidTMemployeesfromreceivingbribesο To require bidders to report any bribe/act of

corruptiontotheauthoritiesο To prohibit unauthorised use of TM’s proprietary

informationbyemployeesandsuppliers

Strategic Themes and Objectives• Management has established four strategic thrusts to

support the achievement of the Group’s key businessobjectives.Theyare:ο Customercentricityandqualityimprovementsο Onecompanymindsetwithexecutionorientationο Operationalexcellenceandcapitalproductivityο Leadership through innovation and commercial

excellence

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Management Control Policy Statement• AccordingtotheManagementControlPolicyStatement

issuedbytheBoardandManagementon8March2011,TMGroupiscommittedtoarisk-basedInternalControlSystem designed to provide reasonable assurance ofachievingtheGroup’sbusinessobjectives,safeguardingandenhancingshareholderinvestmentsandTMGroup’sassets.Thiswillbeachievedthroughtheimplementationof an Integrated Risk Management Framework andprogramme throughout the Group. The Group CEO,HeadsofBusinessandSupportGroupsandtheCEOsofTM’s subsidiaries are responsible and accountable fortheimplementationoftheriskmanagementframeworkandpractices.

Human Resources Policies and Procedures• TheGrouphasmadegreateffortstorealignitsexisting

HumanResourcespoliciesandproceduresaccordingtoinitiativesdevelopedby theGovernmentunder theGLCTransformationProgramme.• The TM Leadership model was established to

support the Group’s strategic initiatives andis embedded within the key human resourcesfunctions of human capital development, talentmanagementandexternalrecruitment.

• ThereareguidelineswithintheGroupforhiringandtermination of staff, formal training programmesfor employees either via classroom sessions orthroughe-learning,semiandannualperformanceappraisalsandotherrelevantprocedurestoensurethat employees are competent and adequatelytrainedtocarryouttheirdutiesandresponsibilities.

Competency-Based Development Framework• TMGrouphasestablishedacomprehensiveframework

that provides a structured competency baselinerequirement to assess existing human capitaldevelopmentneedsacrossvariousmanagementlevels.This is to ensure the Group’s key assets, namely itspeople,andtheirskillsandabilitiesarecompetitiveandremainsointhefuture.

B. Risk AssessmentRisk assessment is the identification and analysis of riskswhichmayimpedetheachievementoftheGroup’sobjectives,and form the basis for determining how risks are to bemanaged.Keyactivitiesinvolvedwithinthisareaare:

Enterprise Risk Management (ERM)• Risk management is firmly embedded in the Group’s

systemofinternalcontrolasitisregardedbytheBoardtobe integral tooperations.Managingrisk isasharedresponsibility and, therefore, is integrated into theGroup’sgovernance,businessprocessesandoperations.It is an interactive process consisting of steps which,undertakeninsequence,enablecontinualimprovementindecision-making.Employees’commitmenttoERMiscontinuouslyemphasisedandreinforced.

• TheMSISO31000hasbeenadoptedbytheBoardRiskCommittee replacing the existing risk managementframework, COSO ERM. The MS ISO 31000 Frameworkwas used by internal audit to assess internal controleffectiveness.

• Group Internal Audit complements the role of the RiskManagement Unit by independently reviewing riskprofiles,riskmanagementstrategiesandtheadequacyandeffectivenessofthecontrolsimplementedinresponsetotherisksidentifiedateveryauditengagement.

• In 2012, ERM was embedded in all lines of business,the corporate centre, support businesses and keysubsidiaries. Each business unit has established anoperationalriskmapandriskregisteralignedwithkeycorporateriskswhileidentifyingandassessingbusinessrisks unique to its operations. The risk profiles at thebusiness unit level are periodically discussed at therespective Operation Meetings (OCMs) to ensure riskand controls are aligned to meet the agreed businessobjectives.

Control Self-Assessments (CSAs) • Control Self-Assessments (CSAs) allow employees

in the Group to identify the risks within their businessenvironmentandevaluatetheadequacyandeffectivenessofthecontrolsinplace.ResultsfromtheCSAsfeatureaskeyinformationinidentifyinghigh-riskareaswithintheGroup.

C. Control ActivitiesControl activities are policies and procedures that help toensure Management’s directives are carried out. RelevantactivitieswithinTMGroupinclude:

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Business Process Manual• The Business Process Manual, first issued in 1996,

provides an overview of the Company’s key businessprocesses and records the relevant policies andprocedures, identifies the responsibilities of keypersonnel involved in theseprocesseswhiledescribingthe procedures involved in the processes whenevernecessary.

• TheManualisapplicabletoallTMemployeesinvolvedintherespectivebusinessprocessesandmustbecompliedwithindischargingresponsibilities.ItservesastheinitialpointofreferencebyTMemployees.

Procurement Policy• TMProcurementPolicyhasbeenestablishedtocontrol

and manage the Group’s procurement activities. Theprocurement philosophy is to procure the best goods/services/work in terms of quality, price, quantity,delivery,supplierandtechnology,usingtheTotalCostofOwnershipapproachtoensuremaximumreturns.

Credit Management Policy• The Group continues to strengthen the execution and

implementationofkeycontrolsasstipulatedinthenewCredit Management Policy that includes assignmentof credit rating, collateral management, managementof customer payment behaviour rating and tainting ofcustomerswithpersistentbadpaymenttrends.Forthemassmarket,theGroupstartedtoimposecreditlimitson UniFi accounts which are to be extended to othertelephonyandbroadbandservices.

• The strengthening of the Group’s credit managementpolicy provides assurance that high-risk customersare duly identified and appropriate credit controls areexecuted to minimise credit and payment risk to theGroup.

Subsidiaries Policy• SubsidiariesPolicy(SP)ispositionedtoensurethatthe

Group’s interests are protected and prioritised at alltimeswhileprovidingadequateflexibilityforsubsidiariestodelivertheirrespectivebusinessobjectives.

TM Corporate Security Policy• TM Corporate Security Policy has been established to

provide a framework for Security Management bestpractices for all personnel to minimise security riskandensureallsecurity-related incidentsareeffectivelymanaged.

IT Governance Policy• TM Group has in place an IT Governance (ITG)

policy consisting of five core domains, namely ITGGeneral Information, IT Principle, IT Architecture, ITInfrastructure, Business Application Needs and ITInvestments and Prioritisation. The policy sets rightsandanaccountabilityframeworktoencouragedesirablebehaviourintheuseofITinTM.

Data Governance Policy and Framework• TM Group has in place a Data Governance Policy and

Framework to protect its data against internal andexternal threats to privacy and confidentiality. DataGovernance embraces a holistic approach to datalifecycles from defining data ownership, classification,handling,retentionanddisposalofkeybusinessdata.

Annual Business Plans• Annual business plans are prepared by TM’s Lines of

Business and all major operating subsidiaries. Theannual business plans are presented and approved bythe Board. Actual performance is reviewed against thetargetedresultsonamonthlybasis,allowingfortimelyresponse and corrective action to be taken to mitigaterisks. The Board reviews regular reports from theManagementonkeyoperatingstatistics,aswellaslegalandregulatorymatters,ifany.

Business Performance Management (BPM) Policy and Guidelines• BPM provides a comprehensive reference to TM’s

Balanced Score Card (BSC), stating the guidingprinciplesandpoliciesforTMGroupondevelopinganddeploying BSC processes. It supports TM’s CorporateGovernance, providing an internal control frameworktomanagestrategyimplementationforbetterbusinessperformance.

TM Tender Evaluation Centre (TMTEC)• AspartoftheGroup’scontinuouseffortstomitigatethe

risk of leakage of sensitive information during tenderevaluationexercises,TMTECwasestablishedatMenaraTMtoserveasacentralevaluationandmeetingvenuefor all procurement activities. TMTEC is equipped withan enhanced physical and IT security system to detectandprovideanintegratedaudittrailofthemovementoftenderdocumentsandinformationwithinthecentre.

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Insurance and Physical Safeguards• Adequate insurance and physical safeguards on major

assets are in place to ensure the Group’s assets aresufficientlycoveredagainstanymishapthatcouldresultinmaterialloss.TheGroup’sinsuranceprogrammealsocoverslegalliabilitiesarisingfromoperations,employeebenefitinsuranceandotherinsuranceprogrammesthatare deemed appropriate to provide financial aid to theGroupagainstinsurableandunplannedlosses.

Customer Experience Programme (CEP)• TheCEP implementation in2012 isacontinuouseffort

to further enhance TM’s customer experience via thecustomer touch points - TMpoints, Contact Centre andfield workforce. The programme continuously reviewsandenhancesservicedeliveryprocessesandefficiencyalongwithinculcationofthe‘service-with-heart’mindsetin frontliners. A committed CEP lab is being activelypursued to ensure gaps found in areas of delightingcustomersareproactivelyresolved,thusachievingTM'sdesired customer excellence aspiration in line with itsvision.

Towards Operational Perfection (TOP)• TOP was launched by Information Technology and

Network Technology (IT&NT) as a three-year initiativeto improve customer experience and operationalperformance inaholistic,end-to-endmanner. In2012,TOP focused on improving HSBB and Data Fulfilment& Assurance, IPVPN Migration, as well as settingthe fundamentals to implement the new Field ForceManagementModel,amongothers.

• Key achievements of TOP include cycle timeimprovementsandtheoverallTRI*Mindex. Installationandrestorationcycletimeshaveimprovedby50.0-80.0%.Mean time to restore (MTTR) for voice and broadbandserviceshaveimprovedby50.0%and70.0%respectively,bringingthenationwideaverageonparwithtopquartiletelecommunications companies globally. In addition,theMeanTimeTo Install (MTTI) forHSBBserviceshasimprovedby80.0%withinninemonthsofimplementation.In termsofoverallcustomersatisfaction,asmeasuredbytheTRI*Mindex,thereweresignificantimprovementsinHighSpeedBroadband(HSBB)services.

• The second wave of the lean transformation waslaunchedinNovember2012,aptlynamedTOP+,tobuildon the success of the first wave. TOP+ will take place

from2013-2015tofurtherdriveWorkforceEffectiveness&Efficiency,aswellasenhanceCustomerExperienceonbothMassMarket&Managedservicedelivery.

Business Continuity Management (BCM) Programme• TMGroupcontinuestoenhanceitsBusinessContinuity

Management (BCM) Programme to ensure it is able toprovideuninterruptedcommunicationservicesfollowingany unplanned or man-made crisis or disaster. TheManagement is committed to enhancing the Group’sservice reliability and resilience via improved coverageof Network & IT Operation BCM, reviewing the BCMprogramme for all TM Call Centres and establishing aBCMprogrammeforthecorporateoffice.

Corporate Responsibility (CR)• TheGrouphasadoptedtheguidelinesforgovernment-

linkedcompanies(GLCs)ascontainedintheSilver Book – Achieving Value Through Social Responsibilityinformulatingits CR strategy, which focuses on sustainability. Thisincludessustainingcustomerretention;sustainingahighlevel of productivity and motivation among employees;sustaining shareholder confidence and sustaining itsreputationinthemarketplace.

• It also adopts Bursa Malaysia’s CSR Framework forPrivate Limited Companies (PLCs) and the GlobalReporting Initiative (GRI-G3) framework as additionalguidelinesforpresentingaconcise;andcomprehensiveviewofTM’sperformance inmanaging itsCRactivitiesandinitiatives.

D. Information and CommunicationInformation and Communication ensures that pertinentinformation is identified, captured and communicated ina form and timeframe that enable people to carry out theirresponsibilities. Relevant key activities within the Groupinclude:

Communication Policy• TM Group is committed to open and effective

communicationasanessentialcomponentofitscultureinordertomotivatetheworkforcetodeliverhighqualityservice and exceptional value to customers and otherstakeholdersaswellastoanticipatetheirfeedback.

• Its purpose is to encourage communicativeness andensure that communication across the Group is wellcoordinated,effectivelymanagedandmeetsthediverseneedsoftheorganisation.

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Recording to Reporting Framework (R2R)• The Recording & Reporting Programme is a non-

compliance reporting framework adopted by GroupFinancetoinstillandenforcebehaviouralchangeacrosstheorganisationtoenhancethequalityand integrityoftherecordingtoreportingprocess.

• The framework provides a mechanism for identifyingandcapturingnon-compliancethatimpacttherecordingand reporting quality while promoting awareness ofcompliance and increasing Senior Management’saccountability. Reporting of non-compliance incidentsis crucial to alert TM’s Management to root causes ofweaknesses, to prevent recurrences and to enable theManagement to present quality and timely reports forfasterandmoreaccuratedecisionsupport.

Best Practice Committee• The Best Practice Committee is a Management

committee that reports to the Audit Committee. Itprovides updates on the development of best practicesandexposuredraftsoncorporategovernance,statutoryandregulatoryrequirementssetbyallstatutorybodiesand relevant authorities, compliance with accountingstandardsandotherbusinessguidelinesandissues.Allrequisiteremindersandupdatesareraisedthrough itssecretariat,theComplianceUnit.

Internal Control Incident (ICI) Reporting• Internal Control Incident (ICI) reporting captures and

disseminates lessons learnt from internal controlincidents on a periodic basis with the objective ofpreventing similar incidents from occurring in otherdivisionsandoperatingcompanieswithintheGroup.

Whistleblower Policy• The Board of Directors has established an Ethics Line

toenableemployeestoanonymouslyreportviolationsinaccounting,reportingorinternalcontrols,aswellasnon-compliancewithTMGroup’sCodeofBusinessEthics.

• TM Group’s whistle-blowing channels comprise user-friendly and confidential Ethics telephone and faxlines and email account. Alternatively, employees canmake reports directly to any of the identified SeniorManagement, including the Group CEO. In 2012, TMGroupconductedseriesofactionstoincreaseemployees’awareness of the channels made available to them forthereportingofwrong-doing.

E. Monitoring Monitoringtheeffectivenessofinternalcontrolisembeddedinthenormalcourseofthebusiness.Periodicassessmentsare integral to the Management’s continuous monitoring ofinternal control. Systematic processes available to addressdeficienciesinclude:

Management Committees• Twotop-levelcommitteeshavebeenestablished,namely

theManagementCommitteeandtheGroupLeadershipTeam (GLT) chaired by the Group CEO, with cleardemarcationofrolesinmanagingtheGroup’sstrategiesand policies more effectively. The ManagementCommittee focuses on providing guidance and makingdecisionsonstrategicmatterswhileGLTconcentratesonmatterspertainingtobusinessperformanceandensureseffectivesupervisionoverkeyoperationalissues.

Audit and Business Assurance Committee• The Audit and Business Assurance Committee (ABAC),

comprising Senior Management from the differentLines of Business, regularly monitors major internaland external audit issues to ensure they are promptlyaddressedandresolved.

Performance Management Framework• Comprehensivemanagement reportsaregeneratedon

a regular and consistent basis to facilitate the Boardand the Group’s Management in performing financialand operating reviews of the various business units.These include reviews of financial and non-financialkey performance indicators, variances between budgetand operating results and compliance with laws andregulations.

Periodic Self-Assessments• Annual disclosures are made by both TM Senior

Management – represented by Group Chief Officers,ExecutiveVicePresidents,VicePresidentsandGeneralManagers – and by TM Group Operating Companies’CEOs and CFOs on the overall effectiveness, reliabilityandadequacyoftheirrespectivecompanies’systemsofinternalandfinancialcontrols.ο Quarterly disclosures on Financial Controls

Compliance and Assurance Statements (FCCAS)formpartoftheinitiativetoinculcateawarenessof‘financialandinternalcontrols’requirementswithintheGroup.

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ο Internalcontroloverfinancialreportingisdesignedto provide reasonable assurance regarding thereliabilityoffinancialreportingandthepreparationof financial statements for external reportingpurposes in accordance with Malaysia FinancialReportingStandard(MFRS).

Headline Key Performance Indicators (KPIs)• TheseHeadlineKPIsareasubsetofbroaderperformance

indicatorsapprovedby theBoard.TheBoardagreed in2012 to report three KPIs from TM Group’s CorporateScorecard as Headline KPIs, namely revenue growth,EBITDAmarginandtheTRI*MIndex.

Group Internal Audit• GroupInternalAuditcarriesoutcontinuousassessments

ontheadequacyofriskmanagementwhilemaintaininga flexible audit approach and robust audit plan thattogether address emerging as well as potential risks.The new design of control was thoroughly assessedfor new projects launched. Group Internal Audit alsoassists to promote effective risk management at thelinesofbusiness.

• Group Internal Audit continues to independently andobjectively monitor compliance with regard to policiesandprocedures,andtheeffectivenessofinternalcontrolsystems.Significant findings and recommendations forimprovementarehighlightedtoSeniorManagementandthe Audit Committee, with periodic follow-up reviewsof the implementation of action plans. Group InternalAudit’s practices and conducts are governed by itsInternalAuditCharter.

Special Affairs UnitThe Special Affairs Unit is responsible for reviewing andmonitoringtheethicalconductandpracticeofallemployees,including Senior Management. Investigation of InternalControlIncidents(ICIs)isalsoundertakenbytheUnit(whereapplicable) and tabled to the ICI Committee and the Boardthrough the Audit Committee. Appropriate actions are thentakenbasedonthestrengthsandmeritsofthefindings.TheSpecial Affairs Unit takes on concerns raised by whistle-blowersforfurtherinvestigation.

REVIEW OF THE STATEMENT BY THE BOARD OF DIRECTORSTheBoardconsidersthesystemofinternalcontroldescribedin this statement to be effective and the risks to be at anacceptable level within the context of the Group’s businessenvironmentandriskappetitesetbytheBoard.TheBoardandManagement will continue to take measures to strengthenthe risk management processes and internal controlenvironmentandmonitorthehealthoftherisksandinternalcontrolframework.

For the financial year under review, the Board is satisfiedthat the systems of risk management and internal controlwere effective and have not resulted in any material loss,contingencyoruncertainty.

TM’s internalcontrolsystemdoesnotapply to itsassociatecompanies, which fall within the control of their majorityshareholders. Nonetheless, TM’s interests are servedthroughrepresentationontheBoardofDirectorsandSeniorManagementposting(s)totheassociatecompaniesaswellasthroughthereviewofmanagementaccountsreceived.Theseprovide the Board with performance-related information toenable informedandtimelydecision-makingontheGroup’sinvestmentsinsuchcompanies.

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aUDiTCOMMiTTeeRePORT

MEMBERsHiP

Fromlefttoright:

qUAH POH KEATChairmanIndependent Non-Executive Director

DATO’ DANAPALAN T. P VINGGRASALAMMemberSenior Independent Non-Executive Director

IBRAHIM MARSIDIMemberIndependent Non-Executive Director

TUNKU DATO’ MAHMOOD FAWZY TUNKU MUHIYIDDINMemberNon-Independent Non-Executive Director

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Detailsofthemembers’attendanceareasfollows:

BAC MemberNumber of BAC

Meetings

Attended/Held %

QuahPohKeat 9/9 100.0Dato’DanapalanT.PVinggrasalam 9/9 100.0TunkuDato’MahmoodFawzy

TunkuMuhiyiddin 8/9 88.9IbrahimMarsidi 9/9 100.0

TunkuDato’MahmoodFawzywasabsentforonemeetingheldduringtheyearashewasawayperformingthehajj.

TheCompanySecretaryactsastheBACsecretaryinallBACmeetings. BAC meetings were also attended by the GroupCEO and Group CFO, together with members of the SeniorManagementandtheexternalauditor,uponinvitation,tobrieftheBAConpertinentissues.

The BAC also had two private sessions with the externalauditorwithouttheManagement’spresence,on18Apriland26September2012.

Minutes of BAC meetings were circulated to all membersand significant matters reserved for the Board’s approvalweretabledatTMBoardmeetings.TheChairmanoftheBACprovidesa reporton thedecisionsandrecommendationsoftheBACtoTMBoard.

SUMMARY OF THE TERMS OF REFERENCE (ToR) OF BACTheToRoftheBACcontinuetobealignedwiththeMainLRandbestpracticespropagatedbytheCorporateGovernanceGuide:TowardsBoardroomExcellenceofBursaSecurities.Atthe same time, the ToR articulating the powers, duties andresponsibilities of the BAC have been revised and updatedover time to ensure alignment with new requirements andregulations.

Audit Committee Report

InlinewiththeTermsofReference(ToR)oftheBoardAuditCommittee (BAC) and in compliance with the Main MarketListingRequirements(MainLR)ofBursaMalaysiaSecuritiesBerhad (Bursa Securities), TM’s BAC consists of fourmembers, three Independent Non-Executive Directors andoneNon-IndependentNon-ExecutiveDirector.ThemajorityofmembersareIndependentDirectorsandnoneofthemisanAlternateDirector.

Mr Quah Poh Keat, the BAC Chairman, is an IndependentDirector and a member of the Malaysian Institute ofAccountants (MIA), fulfilling the requisite qualifications asstipulatedinparagraph15.09(1)(c)(i)oftheMainLRofBursaSecurities. He is also a Fellow of the Malaysian Instituteof Taxation and the Association of Chartered CertifiedAccountants (ACCA), the Malaysian Institute of CertifiedPublic Accountants (MICPA) and the Chartered Institute ofManagement Accountants (CIMA). Another BAC member,TunkuDato’MahmoodFawzyTunkuMuhiyiddin,isamemberoftheInstituteofPublicAccountants,Australia.

TheNominationandRemunerationCommitteeandTMBoardannually review the composition and performance of theBoardCommittees,includingtheBAC.BACmembers’tenure,performanceandtheeffectivenessoftheBAC’sstructureandprocesses as well as its accountability and responsibilitieswereassessedviatheBoardEffectivenessEvaluation(BEE).

Based on the BEE 2012 findings, TM Board agreed that theBAC has shown strong performance over the years and,as illustrated by their profiles on pages 77 to 80 inclusive,the four distinguished members fulfil the requirementsof having sound judgement, objectivity, an independentattitude,managementexperience,professionalism,integrity,knowledgeoftheindustryandfinanciallyliterate.Theyhavedischarged theirdutiesandresponsibilitieswithexcellence.TMBoardfurtheragreedtomaintaintheexistingcompositionoftheBAC.

MEETINGS AND ATTENDANCEBACheldninemeetingsduringthefinancialyear2012,fourtodiscussthequarterlyresultsandthebalancefiveforotherinternalandexternalauditmatters.

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Most recently, the ToR were revised to incorporate therecommendations introduced in the newly enhancedMalaysianCodeonCorporateGovernance2012(MCCG2012)involvingpoliciesandproceduretoassessthesuitabilityandindependence of external auditor. BAC has formalised therequirementforwrittenassurancefromtheexternalauditorconfirmingtheirindependenceandabidedbyotherguidelinesontheengagementoftheexternalauditorfornon-auditwork.

BACwasof theopinion that therevisionnotonlysupportedthe existing processes, it also enabled BAC to encapsulatetheseprocesses into itsToR.Therevisionfurtherreinforcedtheimportanceofassuringtheindependenceoftheexternalauditoratalltimes.

TherevisedToRofBACarenowintegratedintheCompany’sBoard Charter, another adoption of the MCCG 2012’srecommendation,andisaccessibleontheCompany’sofficialwebsiteatwww.tm.com.my.

The summarised key duties and responsibilities of the BACandtheirkeyfunctionsareasfollows:

1. Assessing the Control Environment within TM Groupwhich includes ensuring policy implementation andtheadequacyofcontrols,andreviewingthe integrityofinternal control systems and management informationsystems.

2. OverseeingthefinancialreportingofTMGrouptoensurethat it presents a true and fair view of the Company’sfinancialpositionandperformanceandisincompliancewith applicable financial reporting standards andregulatoryrequirements.

3. DiscussingtheAuditPlanvis-a-vistheCompany’ssystemofinternalcontrolandmonitoringthenon-auditworkbytheexternalauditor toensurecontinued independenceandobjectivity.

4. ReviewingandapprovingtheInternalAuditCharterandInternalAuditPlanandensuringindependenceofGroupInternalAudit(GIA)DivisionandGIA’simpartiality.

5. Reviewingconflictofinterestsituationsandrelatedpartytransactions(RPTs)proposedtobeenteredinto.

6. Verifying the allocation of share options to eligibleemployees (if any). As the Special ESOS expired on16 September 2010, there was no new allocation forESOSduringthefinancialyearunderreview.

7. Ensuringtheavailabilityofwhistle-blowingavenuesandreviewingfrauddetectionprocedures.

8. Reportinganybreachornon-complianceoftheMainLRtoBursaSecuritiesifsuchmattersarenotsatisfactorilyresolvedbytheBoard.

SUMMARY OF PRINCIPAL ACTIVITIES OF THE BAC IN THE FINANCIAL YEAR BAC meetings to discuss and consider the draft quarterlyresultswerescheduledayear inadvancewhilemeetingstodeliberateinternalandexternalauditissuesandfindingswerescheduled in between throughout the year. The organisedplanning allows for focus and for the members to allocatesufficienttimetothoroughlydeliberateeachauditissue.

Throughout the year 2012, the BAC also executedvarious strategies and actions to discharge its duties andresponsibilitieseffectively.Thesummaryofprincipalactivitiesperformedduringthefinancialyearwereasfollows:

1. Internal Controla) Reviewed the Statement of Internal Control (SIC),

which had been audited by the external auditor,in February 2012 for inclusion in the 2011 AnnualReport.TheSICwassupportedbythe2011SpecialReview on Annual Internal Control AssuranceLetter, Special Review on Internal Control HealthCheckandInternalControlIncidentsReport,basedonwhichBACconcluded that theSICpresentedatrueandfairviewoftheCompany’sstateofinternalcontrol.

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b) Reviewed the quarterly reports on the adequacy,effectiveness and reliability of internal controlsystems based on controlled self-assessmentsperformed annually by the Management of theLines of Business and subsidiaries. These issueswere discussed at length to secure a satisfactoryconclusionormovingforwardaction.

c) Reviewed major policy updates, revisions orenhancementstotheLimitsofAuthorityMatrixandBusinessProcessManualasrecommendedbytheManagement to ascertain that the improvementsmade were aligned with business best practicesandeffectiveinternalcontrolprocesses,andmaderecommendationstoTMBoard.

d) DeliberatedonthequarterlyreportsfromtheAuditand Business Assurance Committee on actionstakenbyManagementtoresolvesignificantinternalcontrol and accounting issues highlighted by theinternalandexternalauditors.

e) DeliberatedonthefollowingreportsfromtheBestPracticesCommittee(BPC):

• Updates and developments of CorporateGovernance and best business practices,statutory and regulatory requirements,compliance with accounting standards andotherbusinessguidelines.

• Updates on any material litigations and theirfinancialimpact.

• ReviewofRPTsorrecurrentRPT(RRPT)duringeachquarter.

2. Financial Reporting ThefollowingmatterswerereviewedbytheBACbefore

beingrecommendedtoTMBoardforapproval:

a) Quarterly Unaudited Financial Statements of TMGroup in compliance with Malaysian FinancialReportingStandards(MFRS)134andtheMainLR.

• BAC deliberated on the Company’s quarterlyfinancialstatementson21February,25May,27 August and 20 November 2012 for thefinancialquartersof4Q2011,1Q2012,2Q2012and 3Q2012 respectively and concluded thatthe reports presented a true and fair view oftheCompany’sfinancialperformance.

• Quarterly internal audit review to ensurecompliancewithMFRS134.

• Review of the draft announcements of theAudited and Unaudited Financial StatementstoBursaSecurities,toensurecompliancewithregulatoryrequirements.

• Impactdue tochanges inaccountingpoliciesinvolving the new MFRS was thoroughlydiscussed and scrutinised at length by theBAC.

• Review was also conducted on the impact ofMFRS 136 subsequent to the findings of thereviewonannualimpairment.

b) Audited Financial Statements of TM Group forthe financial year ended 31 December 2011 incompliancewithregulatoryrequirements.

• BACreviewedtheAuditedFinancialStatementsin February 2012 and concluded that thefinancialreportspresentedatrueandfairviewoftheCompany’sfinancialperformancefortheyear.

c) ProposedDividendPayoutforthefinancialyear.

3. External Audita) Reviewed the external auditor’s report on the

final audit report for the financial year ended31 December 2011 and Directors’ Statementof Internal Control in February 2012 beforerecommendingtoTMBoardforapproval.

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b) Reviewed the Internal Control Memorandum,togetherwithManagement’sresponsetothefindingsof the external auditor before recommending toTM Board for approval. The interim findings werepresentedinNovember2011whilethe2011InternalControlMemorandumwastabledinApril2012.

c) Reviewed with the external auditor the 2012audit plan encompassing the proposed auditworkblueprint,natureandscopeof theauditandengagementstrategyinSeptember2012priortoitsimplementation.

d) Reviewedthetermsofengagementoftheexternalauditor for 2012 statutory audit and Directors’SIC, upon confirmation of its independence andobjectivity, in September 2012, prior to tabling forTMBoard’sapproval.Mostoftheengagementoftheexternal auditor for TM Group was handled undertheGroup’sumbrellatoensurestreamlinedtermsofengagement.

e) Reviewed the overall performance of the externalauditor and, upon satisfactory assessment,recommended the fee payable in respect of theworkperformedforTMBoard’sapproval.

f) Reviewedthe2012InterimAuditCommitteeReportinNovember2012.

g) Reviewed and approved the non-audit servicesprovidedbytheexternalauditortoensuretherewasnoimpairmentofindependenceorobjectivity.Thisalsoincludedmonitoringthefeesforallnon-auditworkcarriedoutbytheexternalauditortokeepitwithinthelimitagreed.

h) BAC also diligently exercised its right to holdbiannualmeetingswiththeexternalauditorwithoutthe Management on 18 April and 26 September2012. These sessions were held to ensure theexternal auditor was not restricted in its scope ofauditandtoenablematterstobediscussedopenlywithouttheManagement’spresence.

i) The BAC Chairman, Group Chief Internal Auditor(GCIA)andexternalauditoralsoheldseveralprivatesessionswithoutthepresenceofManagementpriortotheBACmeetings.

WhileenablingtheBACtogainbetterknowledgeofissuesrelatingtoaudit,theseprivatesessionsalsohelpedtoreinforcetheindependenceoftheinternalandexternalauditfunctionsoftheCompany.

4. Internal Audita) Reviewed and approved the GIA’s Annual Audit

Plantoensureadequatescopeandcomprehensivecoverageofactivitiesof theGroupandany reviewthereof. The Internal Audit Plan was presentedto the BAC and discussed at the beginning of thefinancialyear inJanuary2012and thereviewwasdeliberatedinJuly2012.

b) Reviewed the Key Performance Indicators (KPIs),competency and resources of the internal auditfunction to ensure that, collectively, GIA has therequiredexpertiseandprofessionalismtodischargeitsduties.

c) Reviewedthe2011KPIsandperformanceofGIAandGCIAin1Q2012.TheStatementonInternalAuditissetoutonpages128to131ofthisannualreport.

d) Deliberated on the internal audit reports andrecommendations and Management’s response tothese recommendations. Where appropriate, BACwouldinstructManagementtorectifyandimprovecontrolproceduresbasedonGIA’srecommendationsand suggestions for improvements. The detailedreports and findings of the internal auditors weredeliveredtotheBACmembersasandwhenarisingwhile summaries of the major findings werepresented and deliberated at the BAC intervalmeetings.

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e) Updated the implementation of recommendationsby Management on outstanding issues on aquarterly basis to ensure that all key risks andcontrolweaknesseswerebeingproperlyaddressed.

f) Reviewed reports on subsidiary’s audit committeemeetings.

g) Held private meetings and discussions with GCIAon key internal control and internal audit relatedmatters.

5. RPTs and Conflict of Interest Situationa) Reviewed reports of RPT and possible conflict

of interest transactions in ensuring they were inthe best interest of TM, fair and reasonable, onnormal commercial terms and free of conflict.BACdeliberatedon thenatureof the transactionsand provided its recommendations accordingly.Announcementsweremadebasedon the findingsafterBAC’sreview.

b) Periodically reviewed the RRPT to ensure theywereatarm’slengthanddulytrackedagainsttheirmandatedamounts.

c) Reviewed the estimated RRPT Mandate for theensuing year and recommended TM Board toseek the shareholders’ mandate at the annual orextraordinarygeneralmeetingoftheCompany.

6. Integrity and Ethical Matters a) Deliberated on reports in relation to Internal

ControlIncidents(ICI),InvestigationsandDomesticInquiries conducted. BAC provided input and/ordirectivesonthenextcourseofactionontheissueshighlightedandupdateontheprogressofthecasesfromtimetotimeuntiltheconclusionoftheissues.

b) Deliberatedonmajorcasesofinternalandexternalmisconduct in relation to the Group’s Code ofBusinessEthics, IntegrityPactandwhistle-blowerprogramme.

7. Annual Reporting a) Reviewed disclosure statements on Corporate

Governance, Audit Committee Report, SIC,Statement of Internal Audit, Investor RelationsStatement, Corporate Integrity Report, AdditionalComplianceStatementforthefinancialyearended31 December 2011 for inclusion in the AnnualReport 2011 and recommended their adoption bytheBoard.

8. Othersa) Updated selected project review reports, ensuring

theirprogressasperagreedtimelines.

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TRAININGS Duringtheyear,BACmembersattendedvariousconferences,seminarsandtrainingprogrammesnotonlytoenhancetheirknowledgetoenablethemtodischargetheirdutiesefficientlyasdirectorsoftheCompany,butalsotofurtherimprovetheirtechnicalcompetenciesandexpertiseinthefollowingareas:

Aspect Title of Conference/Seminar

Accounting&Finance • Financial Institutions Directors' Education (FIDE) Forum: Roundtable Discussion entitledBoardofDirectors–ValueCreationvsCompliance

• FIDEElectiveProgram:InternalCapitalAdequacyAssessmentProcess(ICAAP)Program• FinancialInstitutionsDirectorsEducationProgramme• LaunchofPerbadananInsuransDepositMalaysia(PIDM)2011AnnualReportandAnnual

Dialogue• MFRSConvergence• MIAConference2012–A-ZofAccountingforChangesinForeignExchangeRates

RiskManagement • FIDEForum:BreakfastTalkentitledInsuranceBananaSkins–RisksFacingInsurersandtheWayForward

• ICAAPWorkshop• PBBIn-HouseTraining:UnderstandingtheICAAP

Strategy • TMBoardTrainingProgramme(BTP):Foresight–LearningonNavigatingtheFuture• DirectorsForum2011:BoardRisingtotheChallengesofCorporateEntrepreneurship• FIDE Forum: Roundtable Discussion on Banking Industry – During this banking era of

consolidation what are the factors to consider if your bank is being acquired or is to beacquired?

CorporateGovernance • BTP:CorporateIntegrity• Corporate Governance 2012: Directing Results Focused Risk Management Program to

strengthenyourEnterprise’sGovernance

Industry • CommunicAsia2012:ShapingVision,CreatingReality• KhazanahMegatrendsForum2012

Resultsofthe2012BEEshowedthattheBACmembershadmaintainedahighleveloftechnicalcompetencyandweregenerallyuptodatewithtechnicalchanges.

This BAC Report is made in accordance with the resolution of the Board of Directors duly passed on 27 February 2013.

quah Poh KeatChairman of BAC

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Group Internal Audit (GIA) strives to provide independent, objective assurance and consultancy services designed to bring value and improve TM’s operations. GIA implements a systematic and disciplined approach to evaluate and improve the effectiveness of the Group’s risk management, overall system of internal control, and governance processes.

STaTeMenT OninTeRnaLaUDiT

The internal audit function adopts a risk-based auditmethodology aligned with the Group’s risks to ensure thatrelevant controls addressing those risks are reviewed on arotational basis. The purpose, authority and responsibilityof Group Internal Audit, as well as the nature of assuranceandconsultancyactivitiesprovided to theGroup,areclearlyarticulated in the Internal Audit Charter. This charter hasbeenreviewedandapprovedby theAuditCommitteeand isinlinewiththeInstituteofInternalAuditors(IIA)InternationalProfessionalPracticesFramework(IPPF).

The internal audit function in TM is managed in-house withtheGIAreportingdirectlytotheAuditCommittee. Inordertopreserve its independence, the Group Chief Internal Auditorperiodicallyreportsontheactivitiesperformedandkeystrategicandcontrol issuesnotedbyGroupInternalAudit totheAuditCommittee. The Audit Committee reviews and approves theGroupInternalAudit’sannualbudget,auditplansandhumanresources requirements to ensure the function is adequatelyresourcedwithcompetentandproficientinternalauditors.

PRACTICES AND FRAMEWORKInordertoensurestandardisationandconsistencyinprovidingassuranceontheadequacy,integrityandeffectivenessoftheGroup’soverallsystemofinternalcontrol,riskmanagementand governance, GIA has aligned its current internal auditpractices with the COSO Internal Controls – IntegratedFramework. Using this framework, all internal controlassessmentsperformedbyGIAarebasedonthefollowingfiveinternalcontrolelements:

• ControlEnvironment• RiskAssessment• ControlActivities• InformationandCommunication• Monitoring

INDEPENDENCE AND OBJECTIVITYInternal audit activities remain free from interference byany element in the organisation, including matters of auditselection, scope, procedures, frequency, timing or reportcontent,tomaintainthenecessaryindependentandobjectivementalattitude.

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GIA has no direct operational responsibility or authorityover any of the activities audited. Accordingly, GIA will notimplement internal controls, develop procedures, installsystems,preparerecordsorengageinanyotheractivitythatmayimpairtheinternalauditors’judgment.

SCOPE AND COVERAGEGroupInternalAuditmaintainsaflexibleauditapproachandadynamicauditplantoaddressemergingcurrentrisksaswellaspotentialfuturerisks.ThishasenhancedtheabilityofGroupInternalAudit toaffectandfacilitatethechangesandfostercontinuous improvements within the Group. For example,the end-to-end process audit has positioned Group InternalAuditattheforefrontofpositivechangebyrecommendingandfacilitatingthealignmentofpeople,processesandtechnologytowardsachievingTM’skeybusinessobjectives.Thescopeofauditengagementisalsoalignedwiththeprimaryrisksoftheorganisationanditskeystrategicinitiatives.Keyauditareasidentifiedin2012,inlinewithbroadCOSOobjectives,were:

1. Effectiveness and Efficiency of Operationsa) Procurement

• ReviewofProcurementContractManagement• ReviewofVendorManagement• Post-Implementation Review of Customer

PurchaseEquipment(CPE)Management• ReviewofSubsidiaryCompaniesProcurement

Process

b) Sales and Marketing• ReviewofTMChannelManagement• Review of Customer Service and Cash

ManagementatTMpointoutlets• Review of UniFi End-to-End Customer

ComplaintsManagement• ReviewofEnd-to-EndContactCentreEfficiency• ReviewofEffectivenessofA&PActivities• ReviewofStateBusinessOperationscovering

Sales, Marketing & Customer ServiceManagement

c) Financial Management• Review of Capital Expenditure (Capex)

ManagementatSubsidiaryCompanies• Review of High Speed Broadband (HSBB)

AccessCapexandCostManagement• Review of Cash Management at TMpoint

CentralRegion• ReviewofRevenueAssurance• Review of Subsidiaries’ Business and

Operations• ReviewofCreditManagement

d) Network• ReviewofNetworkSecurity(UniFiNetwork)• ReviewofInternetProtocol(IP)CoreNetwork

Operations&Maintenance• Review of HSBB Metro e-Deployment,

ProvisioningandOperation• Review of Public Switched Telephone

Network (PSTN) to Next Generation Network(NGN) Network Element (NE) Migration andDecommissioningofPSTN

• Audit on End to End Process of InternetProtocolVirtualPrivateNetwork(IPVPN)

e) Information Technology• ReviewofInformationTechnologyGovernance• Review of Payment Gateway and One-Stop

e-CommerceSolution• Review of Enterprise Application Integration

System• ReviewofCloudComputing

f) Human Capital Management• AuditonHumanResourcesBusinessProcess

2. Reliability of Financial Reportinga) Financial Reporting Reviewsb) Quarterly Interim Financial Reviews

3. Compliance with Applicable Laws and Regulationsa) Related Party Transactions

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Statement on Internal Audit

GIA also assisted the Management in troubleshootinginternal control weaknesses reported by whistle-blowers,complexdataanalysisindetectingerrorsandomissions,postmortems of internal control failures and risk exposures ofmajor TM projects. GIA further participated in the review ofmajorprojectscoveringnewbusinessproductsandsystemstoensureadequatecontrolswereinplacebeforethesewerelaunched. GIA also complied with requests from the AuditCommitteeand/orManagementtoconductspecialreviewsinadditiontothoseplannedfortheyear.Follow-upreviewswereperformedontheimplementationofauditrecommendationsonaquarterlybasisandthestatusofthesewerereportedtotheAuditCommitteeaccordingly.

RESOURCESAtotalofRM6.5millionwasspentoninternalauditactivitiesin2012.Asummaryof the internalauditcost,basedonkeycategories,isasfollows:

Category RM (million)% of total

cost

Manpower 4.7 72%Incidentals(incl.Travelling) 0.4 6%InternalRecharges(incl.Space

Rental,ITCharges,TrainingCosts) 1.4 22%

Total 6.5 100%

Asummaryofthenumberofinternalauditors,basedontheirrespective competencies, as at 31 December 2012, is asfollows:

Discipline

Numberof Internal Auditors Percentage

AccountingandFinance 15 43%InformationTechnology 5 14%Engineering/Network 10 29%Marketing 4 11%Legal 1 3%

Total 35 100%

CO-SOURCING ACTIVITYTherewasnoco-sourcingofinternalauditactivitiesin2012.Alltheinternalauditactivitieswereperformedin-house.

COMMITMENT TO COMPETENCEGIA will continue to position the internal audit division as atraining ground for future business leaders. In maintainingahighlyadaptiveaudit function, there isaneed to invest inupgrading the knowledge and skills of the auditors throughcontinuous development and training. Each auditor isbenchmarked against the Audit Functional CompetencyModeltodeterminehisorherknowledgeandskillsgaps,andundergoes specific training to bridge the gap. The auditorsarealsoexposedtoareassuchasentrepreneurship,strategicbusiness and operations, innovation and risk management,amongothers.

Key seminars and workshops attended by Group InternalAuditin2012wereasfollows:

a) Group Training – in areas such as structured thinkinganalysis, report writing and refresher on requirementsoftheIPPFStandards.Thefollowingprogrammeswerecarriedoutin-housebasedonthetrainingrequirementsneededtonarrowtheskillsgaps:• BasicInternalTrainingProgramme–developedin-

house covering five modules to enhance practicalauditing skills via simulation of real-life auditengagementscenariosencompassingmanagementresponsesandactualdataanalysis.

• Quality Assessment Review Certification – morethan60%ofGIAstaffunderwentthistrainingduringtheyear.

• In-house training and team dynamics programme– which is critical towards maintaining a high-performanceteamthatproducesexcellentresults.GIA is committed to providing similar trainingevery year as this methodology has proven to besuccessful,especiallyinjump-startingnewauditorstoareasonablelevelofinternalauditingproficiency.

• Teamdynamicsession–thisfosterseffectiveteamworkandpromotespositiveinteractionbetweennewauditorsandexistingauditors forbettersynergiesinproducingoutstandingauditingoutcome.

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b) Individual Training – developed based on individualcompetency weaknesses. The type of training providedfor the internal auditors was determined by theircompetencygapscoupledwithfuturerequirementssuchas leadership and management skills. Among the keytrainingattendedbyauditorsasatDecember2012were:• 2012NationalConferenceonInternalAuditing• BuildingARisk-BasedInternalAuditPlan• TeamMateAsiaPacificUserForum2012• InformationManagementSecuritySystem• FinancialStatementFraudPreventionandDetection• Procurement Best Practices & 2012 Corporate

FraudConference• Leadership Sustainability: Turning Leadership

AspirationintoActions• StrategicThinking,Planning&Implementation• ITAudit–ExploringTheWorldofITAuditing• RelatedPartyTransactionAudit:InternalControl• BroadbandWorldForumAsia• InvestigationandEvidenceGathering• CyberSecuritySeminar• Various in-house developed e-learning courses to

improveauditors’functionalskills

Apart from the above, GIA embarked on an extensive GIA-Management Training Collaboration Programme. Thiscomprised knowledge-sharing sessions by subject matterexperts involving key Management to speed up auditors’acquisition of knowledge on the Company’s business andoperations.Thesessionsenabledtheauditorstoobtainfirst-hand knowledge from experts supporting key processeswithinTM.

INTERNAL AUDIT qUALITYThe Group Chief Internal Auditor develops and maintains aqualityassuranceand improvementprogramme thatcoversallaspectsofinternalauditactivities.ThequalityassuranceprogrammeassessestheeffectivenessofGIAprocessesandidentifiesopportunitiesforimprovementviabothinternalandexternalassessments.GIAhasanadvancedpeerreviewermechanismtoensureaconsistently high quality output of every audit engagement.PeerreviewerswithrelevantexpertiseamongSeniorAuditorsortheManagementteamareselectedtoprovideprofessionaladviceandensurethatallriskareasareadequatelycoveredbefore communicating the final engagement results to theappropriateparties.

An internal quality assessment is also performed annuallywithinGIAtoevaluateitsconformancewiththeIIA’sIPPF.Thisisperformedthroughself-assessmentbyaqualifiedCertifiedInternal Auditor (CIA) and includes in-depth interviews,surveysanddetaileddataanalysis.

Further, GIA also organises an external quality assessmentbyaqualifiedindependentrevieweroftheentirespectrumofauditworkperformedbytheinternalauditorsonceeveryfiveyears. The assessment includes areas such as complianceto IIA’s IPPFandGroupInternalAuditManuals,contributionto governance, risk assessment, control processes andperformancemanagement.

Hazimi Kassim quah Poh KeatGroup Chief Internal Auditor Chairman Audit Committee

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MEMBERSHIPSittinginthemiddle:

tUNKU DatO’ MaHMOOD faWZY tUNKU MUHiYiDDiNChairmanNon-Independent Non-Executive Director

Standingfromlefttoright:iBRaHiM MaRsiDiMemberIndependent Non-Executive Director

DatO’ iR aBDUl RaHiM aBU BaKaRMemberIndependent Non-Executive Director

DatO’ DaNaPalaN t.P ViNGGRasalaMMemberSenior Independent Non-Executive Director

DatUK BaZlaN OsMaNMemberNon-Independent Executive Director/Group Chief Financial Officer

BOaRD RiSKCOMMiTTeeRePORT

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Members of the BRC shall possess sound judgment,objectivity,anindependentattitude,managementexperience,professionalism,integrityandknowledgeoftheindustry.

MembersoftheBRCacknowledgethattheirrolesintheBRCareinadditiontotheirdutiesandresponsibilitiesasmembersof the Board. The deliberations of the BRC do not reduceor absolve the individual and collective responsibilities ofthe Board members in regards to their fiduciary duties andresponsibilities. BRC members shall continue to exercisedue care and judgment in accordance with their statutoryobligationsandinthebestinterestoftheCompany.

MEETINGS AND ATTENDANCEBRC held three meetings during the financial year 2012.Detailsofthemembers'attendanceareasfollows:

TheHeadofGroupBusinessAssuranceDivision,whoalsoactsin the capacity of Head of Risk Management Unit, attendedtheBRCmeetingsasapermanent invitee.Otherattendees,external or internal, were invited to attend all or part ofmeetings as and when appropriate and with the consent oftheChairman,tofacilitateBRCbusiness.

TheBRCsecretaryshallbetheCompanySecretaryandinhisabsence,anyexecutive fromtheCompanySecretarialDivisionmayattendthemeetingonhisbehalf.However,theSecretariattotheBRCmeetingsshallbe:• GroupBusinessAssuranceDivision;and• CompanySecretarialDivision

TERMS OF REFERENCEThe terms of reference of the BRC can be viewed on theCompany’swebsiteatwww.tm.com.myunderthetabAboutUs–CorporateInformation–CorporateGovernance.

RISK MANAGEMENT REPORTTM's Enterprise Risk Management (ERM) team in TMcontinuedtoimplementERMasakeystrategicmanagementtool to generate enterprise business value throughoutthe organisation, with strong support from the Boardand top Management. TM Group Risk Management andInternal ControlPolicy Statement, which define TM’s riskmanagementanditsobjectivesaswellastheaccountabilityof top Management, testify to TM’s commitment towardsimplementingERMasanessentialmanagement functionoftheorganisation.

TM continually strengthens its governance, policies,processes and procedures to meet regulatoryrequirements and manage corporate and operationalrisk in the competitive industry. The BRC is responsiblefor risk oversight within the Group and to monitor theimplementation of the ERM policy. In order for riskmanagementtobe institutionalisedeffectively throughoutthe organisation, it has become a permanent agendain both Management Committee Meetings (MCMs) andOperationCommitteeMeetings (OCMs) forTMGroupandits Lines of Business (LOB) respectively. Both platformsdiscussidentifiedrisksandactionplanstomitigatethesetominimisethefrequencyandseverityofthebusinessrisks.

The successful implementation of ERM at the strategiclevelisfollowedbyitsinstitutionalisationattheoperationallevel. The Management is committed to managing risk atevery stage of product and project development, from thepointofinceptionuptopostimplementation.Forinstance,inTM’sGatedandProductAuthorisationProcess,theERMdetermines whether existing risks are at an acceptablelevel or whether additional security controls should beimplementedtofurtherreduceoreliminatetheresidualriskbeforeauthorisingthelaunchoftheproductforoperation.

BRC Member Number of BRC Meetings

attended/Held %

TunkuDato’MahmoodFawzyTunkuMuhiyiddin

3/3 100.0

Dato’DanapalanT.PVinggrasalam

3/3 100.0

Dato’IrAbdulRahimAbuBakar

3/3 100.0

IbrahimMarsidi 3/3 100.0

DatukBazlanOsman 3/3 100.0

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Board Risk Committee Report

Table 1 – ERM implementation process

EnterpriseWideRisk

Strategyand

Appetite

Corporate RiskManagement

Divisional RiskManagement

OperationalRisk Management

Project RiskManagement

Product RiskManagement

BOARD RISK COMMITTEE

MANAGEMENT COMMITTEE

OPERATION COMMITTEE

TM is committed to ensuring quality of service at all timesto safeguard its brand and reputation. As it moves along theERM implementation journey, TM has further strengtheneditsBusinessContinuityPlan (BCP) toaddress theriskofmajorservice outage due to disaster. Further, the Company is alsoenhancing its holistic Corporate Security ecosystem to ensurethreatstoitsinfrastructure,systemsorfacilitiesareadequatelymanagedandrespondedtoinordertoupholdqualityofserviceandcustomersatisfaction.

TM embraces a holistic approach to support its ERMimplementation in managing business risks. A MaturityAssessment has been conducted to gauge the effectiveness ofitsriskmanagementpracticesandsubsequentlytoexpeditetheERMimplementation.

MANAGING OPERATIONAL RISKSAs TM operates in a highly competitive and technology-basedenvironment, continuous and effective risk management is vitaltowards achieving its business targets. The Risk and CorporateComplianceManagementUnit inTM isresponsible formanagingoperationalrisksinherentinthebusinesswithinanacceptablelevel.

1) Strengthening Business Resilience TMiscommittedtoensuringthetimelyrecoveryofitscore

businessanditscontinuityintheeventofdisastertoupholdits quality of service and to preserve shareholder value.Thus a comprehensive Business Continuity Management(BCM) programme has been put in place which enhancesserviceassurancereadiness.TMcontinuestostrengthenitsBCMprogrammeforNetworkand IToperations toensurea resilient operational backbone. It is also enhancing itsserviceassurancereadinessinitsCallCentresandMenaraTM to ensure that critical business functions are able tooperateintheeventofmajorbusinessorsystemdisruptions.

2) Managing Competition Competition risk in the telecommunications industry has

intensified along with the entry of cellular players intothehighspeedbroadbandmarket.Tospur furthergrowthand revenue, TM has executed various strategies focusingon innovativeproductsandservices. Ithasalsoembarkedon communication activities and its Broadband Championprogramme to ensure excellent customer experience ateverytouchpoint.ThesestrategieshaveledtoanincreaseinTMbroadbandsubscribersandmarketshareascomparedtootherplayers.

3) Improving Credit Risk The absence of up-front cash payment in its business

exposesTMtothepotentiallossofrevenueandcreditrisk.KeytoTM’smechanismtomitigatecreditriskis itsCreditManagementPolicy (CMP),which issupportedbyaCreditAssessment Management System (CAMS), an aggresivecollectionprogrammeandtheimplementationofcreditlimitfor mass market products. CAMS and other key initiativessuch as the collection of final accounts and reduction ofcredit cycle treatment have resulted in TM meeting itscollectionperformanceandreducingitstotalbaddebts.Anin-builtcontrolintheCAMSsystemmonitorscreditrating,allocates credit limit, monitors usage against credit limitandmonitorsthecustomerpaymentbehaviour,allowingfortheanalysisandearlydetectionofanydeteriorationincreditmanagementacrossallLOBs.

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4) Managing Security Threat TMisexposedtophysicalandlogicalsecuritythreatsinthe

formof theft, robbery, information leakage,cyberattacks,spamming,hacking,intrusionandfraud.IthasestablishedaDataGovernancePolicytooverseeallfunctionsconcerningdata and information security, continuity and safety byproviding adequate security protection and tools in allnetwork infrastructure and facilities. The implementationofCorporateSecurityManagement inclusiveofGuidelinesfor TM Physical and Logical Security Plan, securityassessmentandDataLeakageProtectionsolutions,ensuresall security risks are minimised. As a result, incidentsinvolvingthefthavereducedwhileITandNetworksecurityhas been gradually strengthened in 2012 as compared topreviousyears.

5) Managing Reputation Risk TMcloselymonitorsthemultitudeofrisksthatcouldaffect

the Group’s reputation and ensures its risk exposure isdiligently managed. These risks include failure to deliverminimum standards of service to customers, unethicalpracticesandhigh-profilelegalsuits.Breachofthirdpartyintellectual property rights, poor financial performanceand continued investigation by authorities could alsoexpose TM to reputation risk. Poor after-sales service isanotheroperationalchallengethatposesareputationrisk.Countering these, the Company has enhanced its brandimagebyimprovingthecustomerexperience,asreflectedinanoverallreductionincustomercomplaints.TheabsenceofnegativemediareportsalsoindicatesTM’sreputationriskisundercontrol.

6) Managing Ethical and Integrity Risk ACodeofEthicsformsthefoundationofanorganisation’s

commitmenttohighethicalstandardsanddictatesthemoralvaluesandbehaviourexpectedbyeveryoneinthecompany.TMnurturesacorporatecultureofhonesty,efficiencyandtrustworthiness as prescribed by its Code of BusinessEthics (CBE) in the belief that an ethical organisation notonlybenefitsfromareputationforbeingexemplary,butalsoachievesbetterfinancialperformanceoverthelongterm.

To maintain a high level of integrity in procurement, TMhas introduced the TM Integrity Pact to eliminate corruptpractices, prohibit unauthorised use of proprietaryinformation by employees and suppliers, and to deteremployees from receiving or soliciting bribes. TM hasfurthersignedaCorporateIntegrityPledgeasadeclarationofitssupportofthenationalagendatocombatcorruption.TM officers also attend a Certified Integrity Officers’Programme,inlinewiththenationalagendaforcompaniestohaverecognisedintegrityofficerstoplan,implementandmonitorintegrityprogrammes.TheseeffortsexemplifythehighestpriorityaccordedbyTMtostaffintegrityasitstrivestomeetitsbusinessobjectives.

7) Managing Occupational Health, Safety and Environment (OSHE)

TM is committed to achieving a higher level of employeesafety and is working towards zero accidents, fatalities,injuries or harm to the environment by ensuring a safeworkplace for its employees and contractors. Employeesand contractors are provided with continuous training toequip them with basic knowledge of hazard identificationandriskcontrol.TMisenhancingitsOSHEperformancebyconductingmoreworksiteinspectionswithgreaterfocusonidentifiedhigh-riskzones.

CONCLUSIONManaging business risks within TM continues to be givendue priority by the Board and Management, ensuring theimplementationofholisticERMpracticesacrosstheGroup.TheGroupacknowledgesthattheERMframeworkandpracticesaredesigned tomanage, rather thaneliminate,businessrisks thatwillhinderit fromachievingitsgoalsandobjectives.Therefore,the Group has in place short and long-term plans to manageanticipated business risks that may expose it to potential losswithinitscapabilityandmeans.

135



TheBCMprogrammeaimstoreducetheimpactofmajoroperationaldisruptionsanddisastersbyreturningtheorganisationtoits‘businessasusual’statefollowinganycrisisordisaster.Indoingso,itsafeguardstheinterestsofkeystakeholders,TM’sreputation,brandandvalue-creatingactivities.In2012,TMBCMestablishedaBCMSteeringCommittee(SC),drivenbythetopSeniorManagement,tooverseeallBCMprogrammesatthecorporatelevel.Thecommitteereviews,approvesandresolvesanychallengesarisingfromthedevelopmentandexecutionofBCMprogrammes.ThisensuresBCMhasitsrequiredsupportwiththerightlevelofpriority.

ACorporateCrisisManagementTeam(CCMT)wasalsoestablishedtoguidetheoperationalmanagementoftheBCMacrosstheGroupbefore,duringandafteranybusinesscrisis.Theteamensuresthatpreventive,correctiveandrecoveryactivitiesaresynchronisedandthatperiodicalcrisisdrillsandexercisesareundertakenasneededtoimprovetheresponsetimefollowinganycrisis.

TM Group continues to strengthen its Business Continuity Management (BCM) programme across the organisation as part of an enterprise risk management tool to ensure business resilience.

Crisis Management DirectorGroup Chief Executive Officer

Alternate Crisis Management DirectorGroup Chief Financial Officer

Crisis Management SecretariatVP Group Business Assurance

SecurityCO PakarSemboyan

RegulatoryChief StrategyOfficer

RiskVP GroupBusinessAssurance

ProcurementGroup Chief Procurement Officer

Logistics/FacilitiesVP Support Business

TechnicalChief Technology &Innovation Officer

FinanceGroup ChiefFinancial Officer

CustomerChief MarketingOfficer

LOBs*VP/GM

Subsidiaries*Chief ExecutiveOfficer

LegalChief Legal,Compliance &CompanySecretary

Human ResourceChief Human Capital Officer

Media and CommunicationsVP Group Corporate Communications

BUSineSSCOnTinUiTyManaGeMenT(BCM) RePORT

136




TM CORPORATE CRISIS MANAGEMENT TEAMInaddition,aProjectManagementOffice (PMO)wasformedto ensure enterprise-wide BCM programmes are wellcoordinated and executed, and to submit quarterly reportsto the SC on progress made as well as its reservations. Itsmembers comprise executives from various divisions in TM–suchasNetworkandGroupInformationTechnology(GIT)–whoaredirectlyinvolvedinBCMattheirrespectivedivisions.

BusinessContinuityPlans(BCP)forNetworkhavebeenestablishedsince2007,withclearlydefinedrolesandresponsibilitieswithin the BCM structure. To date, TM has four Network Recovery Centres nationwide to cater to network operationalrequirementsintheeventoffailureoftheNetworkOperationsCentre.

ContinuouseducationonBCPiscarriedouttoincreasethelevelofemployeereadiness.In2012,disasterrecoveryreadinesswassupplementedbythepurchaseofDisasterRecoveryEquipment(DRE)worthRM20.72million,forimplementationin2013.In addition, regular reviews are done on the Disaster Recovery Plan (DRP), Business Impact Analysis (BIA) to TM networkclusters,awarenessofBCP,simulationtestsonthegroundaswellastable-topexercises.

BCM Programme

Disaster Recovery

Crisis Communication

Security & FacilitiesManagement, EmergencyManagement

Risk Management

Knowledge Management

Quality & Customer ServiceManagement

Health & Safety SupplyChain Management

Chief HumanCapital Officer

Chief Procurement Officer

Chief Technology &Innovation Officer

Chief Strategy Officer

VP GroupCorporate Communications

VP Support Business &CO Pakar Semboyan

VP Group Business &Assurance

VP Entreprise BusinessManagement

VP CSM & Chief Legal,Compliance & Company

Secretary

CurrentKeyBCM Programme

DREImplementation

BCMforNetwork


IT DR Projectfor NIS, iCPNPCS, ICONS Mediation & IDM

TargetCompletionDate:Q3 2012


BCM forGIT


BCPImplementationfor 100,1060,1090,TMUC &MER5999


BCM forCall Centre

ProposedBCMProject(Internal)

EstablishBCM forMenara TM

TargetCompletionDate:2014

BCM forCorporateOffice

BCM Steering Committee

BC

M E

lem

ents

TM B

CM

Steering Com

mittee

TM BCM Framework & Policy

Crisis Management Plan

TheSChasapprovedfourmainfocusareasforBCM,namelyNetwork,GIT,ContactCentreandMenaraTM,androadmapsforeachfocusareahavebeendrawn.

137



Business Continuity Management (BCM) Report

IslandExchange

&Station

DataCentre

MetroExchange

Sub UrbanExchange& Station

RuralExchange& Station

Submarine &Maritime

Satellite &Hill Station

TheBCPatGITisalsowellestablished,withaclearlydefinedBCM structure, roles and responsibilities, supported bycontinuous improvements and education programmes. In2012,GITimplementedtheITDisasterRecoveryInfrastructure(ITDR)andtestedsixcriticalapplications–iCarePrime,NIS,Mediation,ICONS,NPCSandIDM.ItalsocompletedtheannualITDRtestonexistingapplications.GITwillimplementtheITDRinfrastructure and test another three critical applications,namelytheHSBBSystem(NOVA),PaymentGatewaySystem(PG-OSES)andCreditManagementSystem(CAMS).Ontopofthis,GITplanstoautomatetheITDRManagementservicesforgreatereffectivenessandefficiency.

At present, all Contact Centres at TM (TM100, 1060, 1090,MERS 999 Call Centre and VADS Call Centres) have theirrespective BCM strategies in place. In ensuring alignmentwith the BCM Framework, PMO has completed a high-level assessment and Business Impact Analysis on these.Meanwhile, high-level assessment of all business units atMenaraTMhasbeeninitiated.

TMshallcontinuetoensureitsBCMprogrammeiseffectivelyembeddedandimplementedinallbusinessfunctionsfocusingon high probability scenarios which may include a changemanagementprogramme.At thesame time,TM isworkingtowards compliance with ISO 22301 international standardsrequirements.

TM NETWORK CLUSTERS

138




iN aCCORDaNCE WitH aPPENDix 9C Of tHE MaiN MaRKEt listiNG REQUiREMENts (MaiN lR) Of BURsa MalaYsia sECURitiEs BERHaD (BURsa sECURitiEs)

aDDiTiOnaLCOMPLianCeinFORMaTiOnThefollowinginformationisprovidedincompliancewiththeMainLRofBursaSecurities:-

1.0 UTILISATION OF PROCEEDS FROM CORPORATE PROPOSALS In2012,theCompanyissuedseveralIslamicCommercialPapers(ICP)andIslamicMediumTermNotes(IMTN)aspartof

theICP/IMTNprogrammesapprovedin2011.Summaryofthetransactionsandproceedsutilisationistabledbelow:

Issuance Date Type Nominal Value (RM million)

Maturity Proceeds Utilisation

13March2012 ICP 150 15May2012 ForCapitalExpenditure(Capex)requirements

15May2012 IMTN 250 13May2022 FullrepaymentofthepreviousICPandforCapexrequirements

31July2012 ICP 80 10September2012 ForCapexrequirements

10September2012 ICP 150 10October2012butrolledoverto21November2012

FullrepaymentofthepreviousICPandforCapexrequirements

3October2012 ICP 150 21November2012 ForCapexrequirements

19November2012 ICP 100 19December2012 ForCapexrequirements

19December2012 IMTN 300 19December2022 FullrepaymentofthepreviousICPandforCapexrequirements

InadditiontotheICP/IMTNprogramme,TMthroughitswholly-ownedsubsidiary,TMGlobalIncorporated,obtainedafive-yearfixedrateforeigncurrencyloanandconcurrentlyenteredintoaCrossCurrencyInterestRateSwapcontractwhicheffectivelyconvertedtheloanintoanRMliabilityequivalenttoaboutRM298.9millionon20November2012.ProceedsfromtheloanareutilisedtopartlyredeemthetwoICPsofRM150.0millioneach,whichmaturedon21November2012.

[Disclosed in accordance with Appendix 9C, Part A, item 13 of the Main LR]

2.0 SHARE BUY-BACK TheCompanydidnotproposeanysharebuy-backduringthefinancialyear.


139



Additional Compliance Information

3.0 OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES TheCompanydidnotissueanyoptions,warrantsorconvertiblesecuritiesduringthefinancialyear.


4.0 AMERICAN DEPOSITORY RECEIPT (ADR) OR GLOBAL DEPOSITORY RECEIPT (GDR) PROGRAMME TheCompanydidnotsponsoranyADRorGDRprogrammeduringthefinancialyear.


5.0 IMPOSITION OF SANCTIONS/PENALTIES Therewerenopublicsanctionsand/orpenaltiesimposedontheCompanyanditssubsidiaries,DirectorsorManagement

bytherelevantregulatorybodiesduringthefinancialyear.


6.0 NON-AUDIT FEES Theamountofnon-auditfeesincurredforservicesrenderedtotheGroupbytheexternalauditors,PricewaterhouseCoopers’

(PwC)networkofaffiliatedcompaniesduringthefinancialyearisasfollows:

RM

PricewaterhouseCoopersTaxationServicesSdnBhd 211,000

ServicesrenderedbyPwCarenotprohibitedbyregulatoryorotherprofessionalrequirements,andarebasedongloballypractisedguidelinesonauditorindependence.PwCisengagedfortheseserviceswhenitsexpertiseandexperienceofTMareimportant.ItisalsotheGroup’spolicytousetheauditorsincaseswheretheirknowledgeoftheGroupmeansitisneitherefficientnorcost-effectivetoengagetheservicesofanotherfirmofaccountants.


7.0 VARIATION IN RESULTS Therewasnoprofitestimation,forecastorprojectionmadeorreleasedbytheCompanyduringthefinancialyear.


8.0 PROFIT GUARANTEE TheCompanydidnotgiveanyprofitguaranteeduringthefinancialyear.


9.0 MATERIAL CONTRACTS INVOLVING INTERESTS OF DIRECTORS AND MAJOR SHAREHOLDERS TherewerenomaterialcontractsoranycontractsinrelationtoloansenteredintobytheCompanyand/oritssubsidiaries

involvinginterestsofDirectorsormajorshareholderseithersubsistingasat31December2012orenteredintosincetheendofthepreviousfinancialyearended31December2011.

[Disclosed in accordance with Appendix 9C, Part A, items 21 and 22 of the Main LR]

10.0 LISTING OF PROPERTIES On3May2002,theCompanyobtainedawaiverfromBursaSecuritiesfromhavingtodisclosedetailedparticularsofits

propertiesfortheCompany’s2001AnnualReportandsubsequentannualreports.Thewaiverisstillsubsistingtodate.

The net book value of land and buildings and usage of properties for the financial year ended 31 December 2012 isdisclosedinpages390to391ofthisannualreport.


140




11.0 RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (RRPT) At the previous Extraordinary General Meeting held on 8 May 2012, TM had obtained a general mandate from its

shareholdersontheRRPTenteredintobytheCompanyand/oritssubsidiaries(RRPTMandate).TheRRPTMandateisvaliduntiltheconclusionoftheCompany’sforthcoming28thAnnualGeneralMeeting(AGM)tobeheldon7May2013.

PursuanttoParagraph10.09(2)(b)andParagraph3.1.5ofPracticeNote12oftheMainLR,thedetailsoftheRRPTenteredintoduringthefinancialyearended31December2012pursuanttotheRRPTMandatearedisclosedasfollows:

Transactingcompanies

in our Group

TransactingRelatedParties

InterestedMajor

Shareholder/Director

Nature of relationship

Nature of RRPTValue of

TransactionsRM’000

OurCompanyand/oroursubsidiaries(TMGroup)

AxiataGroupBerhad(Axiata)and/oritssubsidiaries(AxiataGroup)

MinisterofFinanceIncorporated(MoFInc.),KhazanahNasionalBerhad(Khazanah),Dato'FauziahYaacob,EshahMeorSuleiman,TunkuDato’MahmoodFawzyTunkuMuhiyiddin,NikRizalKamilTanSriNikIbrahimKamilandDato’MatNoorNawi.

InadditiontotheirshareholdingsinourCompany,MoFInc.andKhazanahareMajorShareholdersofAxiata.

Dato'FauziahYaacobisarepresentativeofMoFInc.onourBoard.EshahMeorSuleimanisherAlternateDirectoronourBoard.

TunkuDato’MahmoodFawzyTunkuMuhiyiddinisarepresentativeofKhazanahonourBoard.NikRizalKamilTanSriNikIbrahimKamilishisAlternateDirectoronourBoard.

Revenue- InterconnectrevenuefromAxiata

Group.44,450

- ProvisionofVoiceOverInternetProtocol(VOIP)relatedservicestoAxiataGroup.

44,084

- Provisionofleased-lineservicestoAxiataGroup.

47,805

- ProvisionofdataandbandwithrelatedservicestoAxiataGroup.

35,910

- Siterentalfortelecommunicationsinfrastructure,equipmentandrelatedchargesbyTMGrouptoCelcomAxiataBerhad(Celcom).

23,960

- ProvisionofInternetaccessandbroadbandservicestoCelcom.

6,785

- CommissiononregistrationandcollectionbyTelekomSalesandServicesSdnBhdfromCelcom.

1,980

- ProvisionofcontactcentreandbusinessprocessoutsourcingservicesbyVADSBerhadtoAxiataGroup.

79,033

- ProvisionoffibreopticcoreandbandwithservicesbyFiberailSdnBhdtoCelcom.

8,986

- Provisionofdarkfibre,bandwidth,spaceandfacilitybyFibrecommNetwork(M)SdnBhd(Fibrecomm)toCelcom.

19,342

- RentalofofficepremisestoAxiataGroup.

14,606

141



Additional Compliance Information

Transactingcompanies

in our Group

TransactingRelatedParties

InterestedMajor

Shareholder/Director

Nature of relationship

Nature of RRPTValue of

TransactionsRM’000

Dato’MatNoorNawiwaspreviouslyarepresentativeofMoFInc.onourBoard.Hewasappointedon1December2011andresignedon28February2013.

Cost- InterconnectchargesbyAxiata

Group.56,542

- Leased-linechargesbyAxiataGroup.

426

- Darkfibreandleased-linechargesbyCelcomtoFibrecomm.

1,209

- VOIPrelatedservicechargesbyAxiataGroup.

54,671

- CorerentalandmobileservicesfromCelcomtoTMGroup.

1,790

TOTAL 441,579

OurCompanyand/oroursubsidiaries

KUBMalaysiaBerhad(KUB)anditssubsidiaries(KUBGroup)

MinistryofFinance,Malaysia(MOF)

Inadditiontoitsdirectand/orindirectshareholdingsinourCompany,MOFholdsa22.55%interestinKUB.

Purchaseand/orutilisationoftelecommunicationsequipment,systemsandrelatedservicesbyTMGroupfromKUBGroup.

47,172

TheCompanyproposestorenewtheRRPTMandateattheforthcoming28thAGM.ThenewRRPTMandate,ifapprovedbytheshareholders,wouldbevaliduntiltheconclusionofthenextannualgeneralmeetingoftheCompany.

142




TM places the highest priority on conducting its business with integrity. Being a government-linked company (GLC), it fully supports the National Integrity Plan (NIP), which advocates enhanced corporate governance, business ethics and corporate social responsibility. The same year the NIP was launched in 2004, TM produced its Code of Business Ethics (CBE) handbook.

CODE OF BUSINESS ETHICSTM’sCodeofBusinessEthics(CBE)wasestablishedin2004to support the Company’s vision and core values, and wasrevisedin2010.TheCBEaimstoinstill,internaliseandupholdthevalueofUncompromising Integrity in thebehaviourandconduct of the Board of Directors, Management, employeesandallstakeholdersoftheCompany.TheCBEalsoformalisestherequirementforallExecutiveDirectors,ManagementandemployeesofTMtodeclaretheirassetsandinterests.

CORPORaTeinTeGRiTy

Awareness of Code of Business Ethics Via Training and IntranetTM Training Centre (TMTC), in collaboration with the Legal&ProcurementDivision,hascreatedashortcorporatevideodepictingexcerptsfromTM’sCodeofBusinessEthics(CBE).This video is to be shown at the beginning of all classes atTMTC in order to solidify the culture of integrity. The videowas launched on 1 October 2012, at a learning session onEmotionalIntelligence.

Throughouttheyear,snippetscomprisingactualcasestudiesrelatedtointegritywerealsoshownontheIntranettoreinforceemployees' sense of responsibility to conduct themselvesappropriatelyatall times.Thesesnippetscoveredelementsin TM’s CBE such as Conflict of Interests, receiving gifts,managing company assets and dealing with TM’s businesspartners.

TM Integrity Pact To further strengthen a culture of integrity, TM introducedtheIntegrityPact,outliningtherightsandobligationsoftheGroupanditssuppliersinabstainingfrombriberyoranyothercorruptpractice,particularlyintheprocurementprocess.TMIntegrityPact,launchedon20January2012byDato’SriHajiAbuKassimMohamed,ChiefCommissioneroftheMalaysianAnti-Corruption Commission (MACC), complements theGovernment’sNationalIntegrityPlanandNationalKeyResultArea(NKRA)onfightingcorruption.

TheIntegrityPact isalignedwithTM’svisionandcorevalueof instilling, internalising and upholding UncompromisingIntegrity and strong work ethics, and is expected to furthersolidifyTM’scommitmenttoexemplarycorporatecitizenry.

FollowingthelaunchoftheIntegrityPact,MACCandTMhavejointlyestablishedaworkingcommitteetoenhanceintegritypractices within the organisation, including suppliers. In2012,TM’skeysuppliersattendedfourtrainingsessions(oneper quarter) conducted at the Malaysian Anti-CorruptionAcademy.TheobjectivewastoensureclearunderstandingofintegritybestpracticesandhighlighttheimportanceofgoodprocurementpracticesinTM.

Corporate Integrity Talk/Dialogue SessionsTM’s leadership plays an important role in developing andmaintaining the Company’s culture of integrity. Hence, adialoguesessiononCorporateIntegritywasheldon28March2012 for TM’s Board of Directors where the guest speakerswereProfDrSyedAbdulHamidAljunid,HeadofEconomicsand Governance Departments, International Centre forEducationinIslamicFinance(INCEIF)andDatukDrMohdTapSalleh,PresidentofInstituteofIntegrityMalaysia(IIM).

143



Corporate Integrity

AnothersessionwasheldforTM'sStateGeneralManagerson10May2012,whereDatukHajiMustafarHajiAli,InvestigationDirector of MACC, was invited to highlight offences underthe MACC Act, and the implications of abuse of power onorganisationssuchasTM.

Finally,thetopicofTM’sIntegrityDialogueSessionatMenaraTMon25September2012wasGood Governance – Best Practices & Principles.ThiswasattendedbytheManagementandabout100employees.TheguestspeakerswereMohdNizamMohdAli,DirectorofPrivateSector,MalaysianInstituteofIntegrity(IIM),PKanason,IIMmemberandaretiredAuditorGeneralofAuditMalaysia,andHazimiKassim,ChiefInternalAuditorofTM.Someof the topicsdiscussedwereWhat Makes Good Governance, Fraud and Corporate Integrity System in Malaysia.

To drive home the message of integrity, the Managementteam also embarked on regional roadshows to present theCodeofBusinessEthics,Whistle-BlowingandIntegrityPactto various audiences in TM. These initiatives coincided withtheTurunPadangsessionsoftheGroupCEOandGroupCFOinthevariousstatesthroughout2012.

Disclosure & Declarations BesidescontinuingwithitspolicyforallTMManagementandemployeestodeclaretheirassetsandinterestsincludingtheirfamilybusiness(es)everyyear,TMintroducedanOnlineGiftsDeclaration for the Management and staff requiring themto report all gifts received throughout the year, particularlyduringthefestiveseasons.

WHISTLEBLOWER POLICYOne of the initiatives established under TM’s CBE was aneffectiveframeworkforwhistle-blowing,reflectingtheBoard’scommitmenttomaintainingthehigheststandardsofethicaland legal conduct within the Group. The importance placedon whistle-blowing is consistent with legal developments,namelytheWhistleblowerProtectionAct2010,aswellastherequirementsstipulatedintheCapitalMarketsandServicesAct2007(CMSA2007),theCGGuideandtheCA1965.

An internal whistle-blowing mechanism was introducedfollowingtheestablishmentofthewhistle-blowingframework,providing employees with a way to channel their concernsregarding illegal, unethical or improper business conductaffecting the Company and about business improvementopportunities.AnindependentcommitteewasalsoappointedbyorderoftheBoardtoensurethereportingchannelissafeandmaintainsconfidentiality.

Anemployeewhohasconcernsaboutanyillegalorunethicalconductintheworkplace,butfeelsuncomfortableorreluctanttodiscussthematterthroughthenormalchannels,hastheoptionofusingTM’sEthicsLinevia telephoneor fax,or the

EthicsWebsite,throughwhichhisorheridentitywillbekeptstrictlyconfidential.

Strong assurance is given by the Board and Managementthatemployeeswillnotbeatriskofanyformofvictimisation,retributionorretaliationfromtheirsuperiorsoranymemberof the Management provided they act in good faith in theirreporting.

Conflict of Interest and Related Party Transactions (RPT)The Directors are aware that they are accountable toinvestigateanypotentialoractualconflictofinterestinrelationtoanymatterwhichcomesbeforetheBoard.Accordingly,allDirectorsarerequiredmakewrittendeclarationsonwhethertheyhaveanyinterestintransactionstabledatregularBoardmeetings.ApaperistabledateachBoardmeetingtoremindtheDirectorsoftheirstatutorydutiesandresponsibilitiesandtoprovideupdatesonanychangesthereon.

The Directors further acknowledge that by declaring theirinterestinanytransactionwiththeCompanyandGroup,theyare to abstain from deliberation and voting on the relevantresolutions at the Board or any general meeting convenedto consider the matter. If a corporate proposal has to beapprovedbyshareholders,Directorswithany interest intheproposalwillabstain fromvotingon theresolution,andwillfurtherundertaketoensurethatpersonsconnectedtothemwillsimilarlyabstainfromvotingontheresolution.

Insider trading TM’s Directors and employees are not allowed to tradein securities or any other kind of property based on pricesensitive information and knowledge which has not beenpubliclyannounced.SuchactionwouldbeanoffenceunderCMSA2007,asstatedinTM’sCBE.

Notices on the closed period for trading in the Company’sshares are sent to the Directors and principal officers on aquarterlybasisspecifyingthetimeframeduringwhichtheyareprohibited from dealing in the Company’s shares. DirectorsarealsopromptednottodealintheCompany’ssharesatanypoint when price sensitive information is shared with them,occasionallyintheformofBoardpapers.

Director’s IndemnityDirectors and officers are indemnified under a Directors’andOfficers’LiabilityInsuranceagainstanyliabilityincurredbytheminthedischargeoftheirdutieswhileholdingoffice.The insurance does not, however, provide coverage in theeventthataDirectororamemberofManagementisprovento have acted negligently, fraudulently or dishonestly. TheDirectorscontributeannuallytowardsthepremiumpaymentforthispolicy.

144




146 GroupFinancialReview151 StatementofValueAdded152 DistributionofValueAdded153 TMGroupProduct&Services

Performance Review

trust

Our track record is testament to our consistently strong financial and business performance, as well as our strong sense of corporate responsibility and sustainability. We will always look towards developing impactful strategies and sustainable business practices to ensure continuous growth.

Operating Revenue (RM Million)

GROUPFinanCiaLReVieWOPERATING REVENUETheGroupachievedcommendablegrowthinoperatingrevenuein2012witharecord9.2%increasetoRM9,993.5millionfromRM9,150.7million in2011,outstripping industrygrowthandthehighestsincethedemerger,drivenbyhigherrevenuefromInternet and multimedia, data, other telecommunicationsrelatedservicesandnon-telecommunicationsrelatedservicesnetofamuchlowerdeclineinvoiceservices.

Internet and multimedia services

Despite intensifying competition in the broadband space,UniFicontinuedtodrivethegrowthinInternetandmultimediaservices, with demand staying strong, to register a 104.0%growth tomore than482,000customersasof31December2012from236,501attheendof2011.TogetherwithStreamyx,the broadband customer base grew by 7.4% to 2.07 millioncustomersfrom1.92millionattheendof2011,maintainingthe Group’s position as Malaysia’s broadband champion. Inlinewiththeincreasedcustomerbase,revenuefromInternetandmultimediaservicesroseby18.5%inthecurrentyeartoRM2,371.9millionfromRM2,001.1millionin2011.

Internet and multimedia services contributed 23.7% to theGroup’s operating revenue for the current financial year,higherthan21.9%in2011inlinewiththeexpandedcustomerbase.

Data services

Dataservices,whichmainlycompriseleasedservices,IPVPNand IP services, grew 9.5% in the current financial yearto RM2,204.8 million from RM2,013.3 million in 2011 fromcontinuingincreaseindemandforhigherbandwidthandtheinstallation of service lines. The availability of higher speedbroadband access ports also contributed to an increase inwholesalerevenueforthissegment.

Contribution from data services to the Group’s operatingrevenuewasbroadlymaintainedat22.1%,inlinewith2011.

Other telecommunications related services

Revenue from other telecommunications related serviceswhich primarily include customer projects, recoverablework orders (RWO), maintenance, broadcasting, restorationof submarine cables, managed ICT, business processoutsourcingandenhancedvalue-added telecommunicationsservices, rose by 19.7% to RM1,328.7 million as comparedtoRM1,110.2millionin2011.Asin2011,theincreaseinthecurrentfinancialyearwaslargelyattributedtohigherrevenuefromcustomerprojects.

Consistentwiththehigherrevenue,othertelecommunicationsrelated services contributed 13.3% to the Group’s operatingrevenuein2012ascomparedto12.1%in2011.

3,73

3.9

3.70

6.0

2,01

3.3

2,20

4.8

2,00

1.1 2,37

1.9

1,11

0.2

1,32

8.7

292.

2

382.

1

Voice services Data services Internet and multimedia

services

Othertelecommunications

related services

Non-telecommunications

related services

2011

2012

146


Performancewww.tm.com.my


2,1

28.0

2,0

44.7

1,9

66.0

2,1

29.1

757

.6

829

.7

602

.1 8

60.6

644

.6

360

.0

342

.7 6

03.0

158

.4

160

.5

299

.5

324

.2

275

.4

245

.6

1,06

2.2

1,18

5.0

Depreciation, impairment and

amortisation

Staff costs Domestic interconnect

and international outpayment

Maintenance Supplies and inventories

Marketing, advertising and

promotion

Utilities Universal Service Provision

contribution

Rental - land and buildings

Rental - leased lines

Other operating costs

2011

2012

175.

5

130.

8

Operating Costs (RM Million)

Non-telecommunications related services

Non-telecommunications related services saw encouraginggrowth of 30.8% in the current financial year registeringRM382.1millioninrevenueascomparedtoRM292.2millionin 2011. The revenue segment, comprising services ofsubsidiaries with core businesses in education, printingand publication of directories, property development andtrading in customer premise equipments, among others,recorded an increase in the current financial year from thedisposalof landbyawhollyownedsubsidiary,TMFacilitiesSdn Bhd despite lower revenue contribution in the otherbusinesses while subsidiaries like Menara Kuala LumpurSdnBhdachievedstrongerperformanceandcontributionascomparedtothepreviousyears.

Withtheimprovedperformanceinthecurrentfinancialyear,this segment of services increased its contribution to theGroup’s operating revenue to 3.8% as compared to a 3.2%in2011.

Voice services

Voice services comprise business telephony (includingISDN, interconnect, international inpayment)andresidentialtelephony. The current financial year saw an encouragingperformance from voice services, with the Group managingto curb the downward trend experienced over the previousyears,froma3.3%reductioninrevenuein2011toamere0.7%inthecurrentfinancialyear.Thedeclineindomesticvoicewasmitigatedbystrongergrowthinwholesalebilateralminutes.

Consequentfromtheabovedeclineaswellasgrowthofotherrevenuesegments,voiceservices’contributiontotheGroup’soperatingrevenuereducedto37.1%ascomparedto40.8%in2011.

OPERATING COSTSTheGroup’soperatingcostsincreasedby7.9%toRM8,972.0million from the RM8,313.2 million recorded in 2011 mainlydue to higher staff costs, maintenance costs and domesticinterconnect and international outpayment. Reduction indepreciation and amortisation costs partially countered theincreaseinoperatingcosts.

Depreciation, impairment and amortisation

Depreciation, impairment and amortisation charges whichincludethewrite-offofproperty,plantandequipment(PPE)andamortisationofintangibleassets,reducedby3.9%(RM83.3million) to RM2,044.7 million in the current financial year.Thisgroupofexpenditureaccountedfor22.8%oftheGroup’soperatingcostsin2012,areductionof2.8percentagepointsfrom25.6%inthepreviousfinancialyear.Lowerdepreciationcharge and write-off/retirement of assets despite higheramortisationofintangibleassetsprimarilycontributedtothereducedcost.

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Performance www.tm.com.my

Group Financial Review

The reduction in depreciation charge was mainly from thedeferment of depreciation charge arising from the revisionof useful lives of certain network assets at the end of theprevious financial year, despite a general increase in assetbasethroughouttheGroup.Thewrite-off/retirementofassetswasalsolowerbyRM69.0millioninlinewithlowerprovisionsforassetsnotidentifiedduringphysicalverification.

Staff costs

Staff costs rose by 8.3% to RM2,129.1 million as comparedto RM1,966.0 million in 2011, mainly due to higher salariesand allowances following a reward transformation carriedout by the Group in continuous efforts to improve returnsto stakeholders, in addition to annual increments for thefinancialyear.TheGroup’sstaffcostsaccountedfor23.7%oftotaloperatingcosts.

Maintenance

Maintenancecostsincreasedby42.9%toRM860.6millioninthecurrentfinancialyear,mainlyduetohighercostsincurredfornetworkmaintenanceaswellascustomerprojectsinlinewith the higher revenue. Maintenance costs accounted for9.6%oftheGroup’soperatingcosts.

Domestic interconnect and international outpayment

Domestic interconnect and international outpaymentincreased by 9.5% to RM829.7 million from the precedingfinancialyearandaccountedfor9.2%oftheGroup’soperatingcosts. The higher costs were consistent with the higherrevenuerecordedforbilateralvoiceandVOIP.

Supplies and inventories

Suppliesand inventoriescost increasedby6.9%toRM644.6millionprimarilyduetohighercustomeracquisitioncostsinlinewiththecontinuedgrowthinUniFicustomerbase.

OTHER OPERATING INCOMEOther operating income increased by 36.8% from RM120.9million in 2011 to RM165.4 million in the current financialyear largely due to the realisation of tax refunds related toa previous Ringgit Malaysia bond and gains on the disposalofassetsheldforsaleofRM13.8million.Therewasnosuchincome in theprevious financial year.Lowerdividends frominternational investmentsandquotedsharespartiallyoffsettheaboveincrease.

OTHER GAINSOthergainscomprisefairvaluechangesandgainsorlossonthe disposal of available-for-sale investments and financialassets at fair value through profit or loss. 2012 recorded again of RM0.3 million as compared to RM286.5 million dueto a gain on the disposal of investment in the Axiata GroupBerhadofRM283.5millionrecordedin2011ascomparedtoaminimalgainonthedisposalof fixed incomesecuritiesofRM3.3millioncounteredbyRM3.0million fairvalue lossonequitysecuritiesinthecurrentfinancialyear.

NET FINANCE COSTNetfinancecostfortheGroupreducedby51.4%fromRM243.8millionin2011toRM118.5millioninthecurrentfinancialyearprimarily due to unrealised foreign exchange gains on thetranslationofborrowingsasexplainedbelow.

Finance cost

Finance cost increased by 4.2% to RM331.5 million in linewith increased borrowings with the issuance of IslamicMediumTermNotesandIslamicCommercialPapers.AnewJapanese Yen medium term loan drawn down in November2012alsocontributedtothehigherinterestexpense.Thenewborrowings are raised to finance capital expenditure duringthefinancialyear.

Finance income

Financeincomeincreasedby5.0%toRM139.6millionin2012mainlycontributedbyhigherincomefromdepositsfollowinghigher fund placement. Average cash balance for 2012 wasRM3,118.7millionascomparedtoRM2,964.6millionin2011.

148




Foreign exchange on translation of borrowings

TheGrouprecordedaforeignexchangegainofRM79.8millionin thecurrent financial yearon the translationofUSDollardenominated borrowings as compared to a loss of RM62.5millionin2011.

Fairvaluelossonforeignexchangeforwardcontractsenteredto hedge US Dollar bonds was presented within the foreignexchangeontranslationofborrowings.TheRM6.4millionfairvaluelossthattheGrouprecordedascomparedtotheRM3.9milliongain in2011isconsistentwithweakeningUSDratescomparedtothepositionin2011.

Consequent from the above, the current financial yearrecordedanetforeignexchangegainofRM73.4millionin2012ascomparedtoanetlossofRM58.6millionintheprecedingfinancialyear.

TAxATIONForthesecondconsecutivefinancialyear,theGrouprecordedanettaxincomeofRM238.6millionascomparedtoRM242.4millionin2011fromtherecognitionofdeferredtaxassetsonunutilisedhighspeedbroadbandandlastmiletaxincentives.

PROFITABILITYThe Group’s profit before taxation for the current financialyearofRM1,069.6millionincreasedby6.8%fromRM1,001.2millionin2011duetoahigherincreaseinoperatingrevenueby 9.2% as compared to operating costs by 7.9% coupledwith the impact of unrealised foreign exchange gain duringthe financial year net of lower other gains. The recognitionof deferred tax asset further improved the Group’s profitattributable to equity holders for the financial year whichincreased by 6.1% to RM1,263.7 million from RM1,191.0millionin2011.

TOTAL ASSETSThe Group’s total assets decreased slightly by 0.3% toRM22,195.9millionfromRM22,252.3millionattheendoftheprevious financial year mainly due to lower cash and bankbalancesandtradeandotherreceivables,partiallyoffsetbyhigherproperty,plantandequipment(PPE).

Cash and bank balances

The Group’s cash and bank balances decreased by 11.3%(RM474.3million)toRM3,738.7millionattheendof2012dueto the combined cash outflow for the capital repayment inSeptember 2012 of RM1,073.2 million, payment of final andinterim dividends of RM350.6 million each and purchase ofPPE,whichexceededthetotalnetcashinflowfromoperatingactivitiesandnetproceedsfromborrowings.

Trade and other receivables

Trade and other receivables reduced by 5.0% to RM2,207.0million from RM2,323.2 million at the end of 2011. TheCompany accounted for RM305.4 million of the reductionarisingfromimprovedcollectionduringthefinancialyear.

1,1

91.0

1,2

63.7

711

.2

1,0

81.1

Group Company

2011

2012

Profit attributable to equity holders of the Company (RM Million)

149



Group Financial Review

Property, plant and equipment (PPE)

TheGroup’sPPEincreasedby3.7%toRM14,637.6millionascomparedtoRM14,121.7millionattheendof2011partlyduetocapitalexpenditureincurredforcustomerprojectsontopofadditionsfortheHighSpeedBroadband(HSBB)project.Thelowerassetwrite-offanddepreciationchargeinthecurrentfinancial year arising from revised useful life for certainnetworkassetsattheendofthepreviousfinancialyearalsocontributedtotheincreaseinPPE.

TOTAL LIABILITIESTheGroup’stotalliabilitiesincreasedby3.2%toRM15,135.9millionattheendof2012primarilyduetohigherborrowingspartiallyoffsetbyareductionindeferredtaxliabilities.

Borrowings

The Group’s borrowings increased by 11.4% to RM7,140.4millionduetonewborrowingsdrawndowndespiterecordinga RM79.8 million unrealised foreign exchange gain duringthe financial year. The new borrowings were in the form ofadditionalRM550.0millionIslamicMediumTermNotesandaJPY7.8billionborrowingsfromafinancialinstitution.

SHAREHOLDERS’ EqUITYThe Group’s shareholders’ equity reduced by 7.1% fromRM7,424.0 million at the end of 2011 to RM6,894.8 millionattheendofthecurrentfinancialyear.ThereductionwasaresultfromtheRM1,073.2millioncapitalrepaymentmadeinSeptember2012andappropriationofthe2011finaland2012interimdividendsofRM350.6millioneachbeinggreaterthanthecurrentfinancialyearprofitattributabletoequityholdersoftheCompanyofRM1,263.7million.Anupwardrevaluationof the Group’s freehold land amounting to RM508.7 millionarising from the Group electing for an optional MalaysianFinancial Reporting Standard (MFRS) 1 exemption ontransitioning to MFRS framework also partially offset thereductionarisingfromthecapitalrepayment.

Earnings per share (EPS) and return on shareholders’ equity (ROE)

Consequent fromthehigherprofitattributable to theequityholders of the Company for the current financial year,the basic EPS increased to 35.3 sen from 33.3 sen in 2011.Similarly,ROEimprovedto17.7%in2012from15.8%in2011.

Dividends

An interim single-tier dividend of 9.8 sen per share waspaid for the current financial year, on 28 September 2012to shareholders whose names appeared in the Register ofMembers and Record of Depositors on 14 September 2012.Theproposedfinalsingle-tierdividendisa12.2senpersharepayout,subjecttoshareholders’approvalattheforthcomingAnnual General Meeting of the Company. This would give atotal dividend payout of RM787.0 million, in line with theCompany’s dividend payout policy of RM700.0 million or upto 90% of normalised profit attributable to equity holders,whicheverishigher.

EPs and ROE

33.3

2011

15.8%

17.7%

2012

35.3

EPS (Sen) 2011

ROE (%)

EPS (Sen) 2012

150




Valueaddedisameasureofwealthcreated.ThefollowingstatementshowstheGroup’svalueaddedfor2011and2012anditsdistributionbywayofpaymentstoemployees,government/approvedagenciesandshareholders,withthebalanceretainedintheGroupforreinvestmentandfuturegrowth.

2011RM Million

2012RM Million

VALUE ADDEDRevenue 9,150.7 9,993.5Purchaseofgoodsandservices (4,219.2) (4,798.2)

ValueaddedbytheGroup 4,931.5 5,195.3Otheroperatingincome(net) 120.9 165.4Othergains(net) 286.5 0.3Financeincome 133.0 139.6Financecost (318.2) (331.5)Foreignexchange(loss)/gainonborrowings (58.6) 73.4Shareofresultsofassociates 0.1 0.9

Valueaddedavailablefordistribution 5,095.2 5,243.4

DISTRIBUTIONToEmployeesEmploymentcost 1,966.0 2,129.1ToGovernment/ApprovedAgenciesTaxationandZakat* (235.9) (236.3)ToShareholdersDividends 702.1 701.2Non-controllinginterests 46.1 42.2RetainedforreinvestmentandfuturegrowthDepreciation,impairmentandamortisation 2,128.0 2,044.7Retainedprofits 488.9 562.5

Totaldistributed 5,095.2 5,243.4

* Includesdeferredtaxassetsrecognisedonunutilisedtaxincentivesasdisclosedinnote19tothefinancialstatements.

STaTeMenT OFVaLUe aDDeD

151



20122011

Employees - Employment cost

Government/Approved Agencies- Taxation and zakat

Shareholders - Dividends andnon-controlling interests

Retained for reinvestment andfuture growth - Depreciation,

impairment, amortisation and retained profits

RM1,966.0 million

38.6%

-RM235.9 million

-4.6%

RM748.2 million

14.7%

RM2,616.9 million

51.3%

RM2,129.1 million

40.6%

-RM236.3 million

-4.5%

RM743.4 million

14.2%

RM2,607.2 million

49.7%

20122011

Employees - Employment cost

Government/Approved Agencies- Taxation and zakat

Shareholders - Dividends andnon-controlling interests

Retained for reinvestment andfuture growth - Depreciation,

impairment, amortisation and retained profits

RM1,966.0 million

38.6%

-RM235.9 million

-4.6%

RM748.2 million

14.7%

RM2,616.9 million

51.3%

RM2,129.1 million

40.6%

-RM236.3 million

-4.5%

RM743.4 million

14.2%

RM2,607.2 million

49.7%

DiSTRiBUTiOn OFVaLUe aDDeD

152




TM GROUPPRODUCTS &SeRViCeSVOICE SERVICE ACCESS• Homeline• Businessline• CDMA• ISDN• Centrex

VALUE ADDED SERVICES• Infoblast• BBPhone• Voicemail• TollFree1300/1800• 600PremiumServices

PREPAID SERVICES• iTalk

CONFERENCING SERVICES• AudioConferencing• VideoConferencing• AudiowithDataConferencing

• Broadband (Consumer)– UniFiVIP– Streamyx– TMWiFi– StreamyxWireless(CDMA/EVDO)

• Broadband (Business)– UniFiBiz– BusinessBroadband– Direct– In-BuildingBroadbandService

(IBS)

INTERNET VAS• GlobalRoaming• iShieldPlus• OnlineGuardPlus• VirusShield&AntiSpamming

DATA SERVICESMANAGED NETWORK• IPVPNPremier• IPVPNLite• IPVPNValue

MANAGED CONNECTIVITY• DLL–Digitaline1(DG)• DLL–Wideband(DQ)• DLL–Broadband(BLL)• VSATPremier• VSATClassic• VSATValue• Hyperband• METRO.Ethernet

GEOMATICS• AVLS(AutomaticVehicleLocation)• SmartMap• NavigationSystem

Application Service• Webmail

Content Services• HyppTV• Hypp.tv• Hypptunes

VOICE SERVICES• PSTNMinutes• InterconnectMinutes• WholesaleVoIP

ACCESS SERVICES• HighSpeedBroadband(Access)

Service• PayphoneAccess• DigitalSubscribersLine(DSL)

Wholesale• DSLResale

BACKHAUL SERVICES• HighSpeedBroadband(Transmission)

Service• WholesaleEthernet• ManagedBandwidth• OpticalBandwidth• InterconnectBandwidth• WholesaleInternetAccess• DomesticTransitAccess• IPWholesale

INFRA SERVICES• TenancyServices• InfrastructureSharing

RETAIL BUSINESS

WHOLESALE BUSINESS

GLOBAL BUSINESS

GOVERNMENT SEGMENT

VOICE SERVICES• BilateralVoiceServices• WholesaleVoiceServices

– PSTN– VoIP

• InternationalValueAddedServices– GlobalVoiceSolutions– ISDNHubbing– InternationalFreephoneServices

viaVoIP

DATA SERVICES• GlobalEthernetServices

– GlobalEthernetVirtualPrivateLine(EVPL)

– InternationalEthernetPrivateLine(IEPL)

• InternationalBandwidthServices– InternationalPrivateLeased

Circuit(IPLC)– BandwidthTransit– BandwidthBackhaul– BandwidthInterconnection– GlobalVSAT

• IPServices– IPTransit

• VPNServices– GlobalIPVPN

VALUE ADDED SERVICES• ManagedSecurityServices(MSS)• ManagedFirewallServices• ManagedIntrusionPreventionSystem

(IPS)• ManagedAntiVirusServices• ManagedContentFilteringServices• BandwidthManagementServices• PublicKeyInfrastructureServices

INFRA SERVICES• ManagedHostingServices

MANAGED IPVPN

153



trust156 RetailBusiness

157 Consumer159 SmallAndMediumEnterprise162 Enterprise164 Government

166 WholesaleBusiness170 GlobalBusiness175 VADS180 NewMedia184 SupportBusiness192 IT&NTPoweringTM’sCustomerExperience196 BoxArticle–TM’sE3INFRA200 International&DomesticInfrastructure&

TrunkFibreOpticNetwork202 TMWorldwideCoverage

Business Review & Functions

We are extremely focused in cultivating a performance driven culture. With the right strategies and processes in place, it is the way we work together and function as one team, with a common understanding of our purpose that unites us in our goals towards future successes.

ReTaiLBUSineSS


156


www.tm.com.my Business Review and Functions

ReTaiLBUSineSS

faCts at a GlaNCE

COnSUMeR

revenuegeneratedbyTMConsumer

RM2.72 billion

broadbandsubscribers(StreamyxandUniFi)

1.7 million

phonesubscribers

2.8 million

OVERVIEWDespite the challenging business environment in 2012, TMConsumeronceagaingrewitsrevenue,drivenbyitsBroadbandoffering to Malaysian households. Other than securing newinstallations and introducing upgrading initiatives, greateremphasisonreducingchurnwhileheighteningthecustomerexperiencealsocontributedtoitsoverallachievements.

FINANCIAL PERFORMANCEInthefinancialyearended31December2012,TMConsumerrecordednetsalesofRM2,724million,markingan increaseof9.5%fromits2011performance.ThiswasachievedmainlyfromstronggrowthinBroadbandaswellasmitigateddeclineinVoice.Despitethechallengingenvironment,TMcontinuedtomaintainitsleadershippositionintheBroadbandsegment.Thetotalnumberofbroadbandsubscribersgrewby9.7%to1.7 million customers by end 2012. Demand for UniFi, TM’sbrandofhighspeedbroadband,remainedstrongwithmorethan406,009residentialcustomersbyend2012contributingRM622.0 million in revenue. This is more than double the201,842customersachievedin2011.

ExCEPTIONAL CUSTOMER ExPERIENCE UniFiThanks toanaggressiveroll-outstrategy,TMhasbeenableto offer the UniFi service to more than 1.3 million premisesnationwide. To meet the fast growing demand for UniFi, TMConsumerpracticallydoubledthenumberofsaleseventsheld,whilecontinuingtoenhancecustomerexperiencebyimprovingtheinstallationtimetowithin10days.

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www.tm.com.myBusiness Review and Functions

A special SuperSpeedMe promotion was launched in March2012toprovideabetterhighspeedbroadbandexperiencetoexisting customers. Applicable to both Streamyx and UniFi,subscribersgettodoubletheirbroadbandspeedwhilepayingtheirexistingpackagefeeforthefirstthreemonths.

Streamyx BroadbandStreamyx remains the fixed broadband of choice for themasses, helping TM retain its leadership position in theMalaysian broadband market with close to 1.3 millionresidential customers nationwide. As of end 2012, 74.0%of Streamyx subscribers were on speeds of 1Mbps andabove, and TM is focusing on upgrading its customers tohigher speed packages to ensure they get to enjoy a betterbroadbandexperience.TofurtherpromoteStreamyx,TMhasmade available online registration for the service startingJune2012.Customerscannowconductvariousself-serviceactivitiesonline,suchasmanagingtheiraccounts,checkingtheserviceavailabilitybasedontheirhomeaddress,aswellasbookinginstallationappointments.Customerswhosubscribeto Streamyx via online registration also enjoy a one-monthwaiveronthepackagesubscriptionfee.

VoiceThe number of Voice customers increased during the year,drivenmainlybythetake-upofUniFi,whichisbundledwithVoiceandTV.At thesame time,usageof the fixed linewasdrivenbycampaigns targetedatTMConsumer’s2.8millionVoicecustomers.Forexample,amajorityofStreamyxandallUniFisubscriberscanenjoyfreecallsnationwidetoTMfixedlines,aswellasaflatrateof10sen/minforcallstomobiles.InresponsetoincreasingdemandforcheaperIDDcalls,TMintroduced its first ever IDD Call Plan packages offering upto 1,000 minutes of free talk time with following calls fromas low as 15 sen/min to eight countries, namely Canada,China,Singapore,SouthKorea,HongKong,Japan,theUnitedKingdomandtheUnitedStatesofAmerica.

ENRICHING CUSTOMER LOYALTY Tosustainlastingrelationshipswithcustomers,TMshowsitsappreciationtoloyalcustomersby‘givingback’tothemviaTMRewards.AllcustomersneedtodoissignupfortheprogrammeforfreeandgainpointsforeveryTMsubscriptionandpayment

made.Thepointscanberedeemedwithattractivegiftssuchasvouchersandbillrebates.In2012,TMgave1,000pointstocustomerswhoupgradedtheirspeedduringtheSuperSpeedMepromotionand500pointsforAutopaysubscriptionandforeverymonthlyTMbillpaymentmadeontime.

EFFECTIVE CUSTOMER ENGAGEMENT TMstrivestogotheextramileinengagingitscustomersinnovelways.OnerecenteffortwasSalamMesraTM,aprogrammethatsaw TM employees reach out to existing customers by goingdoor todoor to theirhomes.Theprogrammecovered50,000customer homes. During the visits, TM employees listenedto the customers’ issues and feedback, updated customers’contact details, and assisted them to apply for broadbandupgrades as well as to subscribe to Autopay Service. Suchengagement not only enhances the customer experience butcreatesabetterbondbetweenTManditsvaluedcustomers.

PROSPECTSFor the year 2013, TM Consumer aspires to deliveranevenmoreenhancedcustomerexperience.Apartfromexpandingitsbroadbandoffering,morecontentwillbeacquiredandcustomisedinpackagestosuitallendusers.Theaimistoservecustomersnotonlyathome,butalsobeyondthehome.

Consumer

Imri Mokhtar, Executive Vice President TM Consumer flags off during the launch of Salam Mesra TM in September 2012.


158



OVERVIEWTM’sSmall&MediumEnterprise(TMSME)businesscontinuesto be a key contributor to TM’s growth. In 2012, TM SMEcreatedwavesinthebusinesslandscapebyofferinginnovativebundledsolutionsaswellasnewICTandapplications-basedproducts aimed at increasing productivity and operationalefficiencyforitscustomers.

FINANCIAL PERFOMANCETM SME recorded revenue growth of 3.9% year-on-yearfrom RM1,840.6 million to RM1,912.2 million, mainly due tohigherrevenuefromInternetservicesandothervalueaddedtelecommunications services which mitigated the decline invoiceservices.Despitethedeclineinvoice,itremainedakeyrevenuegenerator,whileInternetservicesprogressivelybeenthepreferredtelecommunicationsmediumwithinthemarket.

In2012,revenuefromInternetserviceswasgeneratedmainlybyanincreaseinnumberofUniFicustomersfrom34,310to75,089. Internet contributed to13.8%ofTMSME’s revenuegrowth despite a decline in Business Broadband customersfrom267,907to242,644.

faCts at a GlaNCE

SMaLL anD MeDiUMenTeRPRiSe

revenuegrowth

3.9 %

revenue

RM1,912.2 million

UniFiBIZsubscribers

75,089

159



KEY INITIATIVESThepriority in2012was to furtherexpandservicessuchasUniFi, Business Broadband, Value Added Services (VAS)and cloud computing. TM SME strengthened its positionby offering total solutions such as e-marketplace, securitysolutions and unified communications, positioning itself asthepreferredtelecommunicationspartnerforSMEs.In2012,TMSMEalsoincreaseditscollaborativeeffortswithpropertydeveloperstoinstallHSBBinfrastructureinnewcommercialandresidentialprojects.

SALES AND MARKETINGAkeynewsalesandmarketinginitiativelaunchedduringtheyearwasSMEBizFest™,whichaimstoshowcaseinnovativeICTsolutions forSMEs fromTMand itspartners.This two-dayeventwastakentoPenang,JohorandPetalingJayafromApril to May 2012, attracting more than 3,000 participantswhichincludedTMpartnersMicrosoft,GreenOranges,CIMB,NEF, Panasonic, Intel, Google and eOneNet.com. The eventincluded plenary conferences, technology demonstrationsandexhibitions.

TMSMEalsocontinuedwith itsSMEBizNet™roadshowstofurthereducatebusinessesonthebenefitsandadvantagesofICT,focusingoncloudcomputingin2012.

OPERATIONSRecognising that different businesses have different needs,TMSMEofferscustomisedsolutionstotheSMEmarketwithastrongfocusoncreatingcost-efficiencies.InformationandCommunicationsTechnologies(ICT)andVASarecontinuouslydeveloped tohelpcustomersachievemorevalueata lowercost.Atthesametime,thesesolutionsenhanceoperationalefficienciesbyallowingSMEstofocusontheircorebusiness.

Poised to bring Malaysian SMEs further up the value chainwith affordable and enhanced connectivity, TM introducedhigherspeedsofUniFiandincludedIPTVaspartofitsUniFiforBusiness(UniFiBIZ)packageon26November2012.OtherthanIPTV,BIZ30andBIZ50comewithahostofcomplimentaryproducts and services such as free DECT phones, WiFiBusinessGetaway,TMWiFiID,10GBWebHostingalongwith2GBe-mailaccounts,InfoblastaccountsandVASoptionssuchaswebstorage,securityandanadd-onfixedIPaddress.

Small and Medium Enterprise

Business customers can also enjoy HyppTV for Business,an optional paid service via IPTV delivered on UniFi’s high-speed broadband network over Set-Top-Box (STB). It offersexciting infotainment with uninterrupted and crystal-cleartransmission,regardlessoftheweather.

FurtherstrengtheningitssuiteofInternet/BusinessBroadbandservices,TMSMEon5December2012 launchedOffice inaBox™withMicrosoft®Office365.ThiscollaborationbetweenTM and Microsoft combines cloud-powered communicationwithMicrosoftOffice365productivitytools,allowingSMEstoenjoyTM’sbusinessgradebroadbandconnectivityatspeedsrangingfrom1Mbpsto8Mbps,competitivecallrates,value-added services and also Microsoft Office 365. SubscribersbenefitfromtheefficienciesbroughtaboutbyMicrosoftOfficee-mail, web conferencing, instant messaging and onlineversionsofMicrosoftOffice.

Twonewvoiceserviceswereintroduced–BizVoicePrimaryRateInterface(PRI)andTMFaxPlan.BizVoicePRI,launchedon16July2012,targetsIntegratedServicesDigitalNetwork(ISDN) PRI customers. ISDN is a system of digital phoneconnections designed for sending voice, video and datasimultaneouslyoverdigitalorordinaryphonelines,atamuchfasterspeedandhigherqualitythanananaloguesystem.TheBizVoicePRIserviceisabundledcallplan,offeringfreeusageandattractive lowercall rates to fixedandmobilenumberswith PRI lines. Adding to this offering is Infoblast SMS,whichallowscustomerstosendbetween500and1,500textmessagesamonth.

TM Fax Plan, introduced on 14 December 2012, offers freefax usage, low and attractive fax rates for international anddomestic use as well as RM100 vouchers for the purchaseof new fax machines. The entire package is offered at anaffordableRM78permonth.

Data and VAS solutions were also enhanced with newofferings. On 11 May 2012, BizApp Store was introducedoffering cloud-based business applications and solutions.Currently, customers can choose from nine applicationsoffering solutions in Sales & Marketing, Human Resources,Collaboration, Finance & Accounting, and CustomerRelationshipManagement.


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SmartBIZ,introducedatBizFestinPenangon13April2012,is a managed secure private network offering that comeswithmanagedInternet.TheproductisbundledwithattractiveVASandbusinessapplicationstoboostproductivity. Itoffersasimple,convenientandcost-effectivecommunicationstoolsuitable for SME businesses which have multiple branchesand critical ICT usage. The product also comes with value-addedICTservicesthatincludemanagingthelifecycleoftheequipmentatnoadditionalcost.

Finally, Marketing Tools, which debuted on 21 May 2012at the BizFest in Kuala Lumpur, enables businesses toexpand their reach using Infoblast, Internet Yellow Pagesandothercomplimentaryonlineservices.Thissolutionalsoallowssubscribers tocollect feedback fromcustomers,andmeasure the response to their marketing efforts. FollowingSME’s collaboration with Lelong.my on 17 December 2012,Marketing Tools was enhanced with Lelong.my’s Web Storewhichisofferedasacomplimentaryservice.

PROSPECTSIn 2013, TM SME will continue to focus on salesexecution and retention programmes. InnovativeproductsandsolutionsfortheSOHOandMicromarketswillbedevelopedandlaunchedtofurtherexpandTM’smarket share in the business sector. TM SME willalsoreinforceitseffortstoeducatecustomersonthebenefitsoftotalICTsolutionsforbusinessgrowth.

Signing ceremony of Collaborative Agreement between TeAM, TM and VADS. From left: General Manager, TM SME Mohamad Yusman Ammeron, TeAM Council Member Yusno Yunos; TeAM President Aziz Ismail; VADS Chief Executive Officer Ahmad Azhar Yahya; Azizi A Hadi, Executive Vice President, TM SME and VADS General Manager Faezah Mohd Amin.

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OVERVIEWTheyear2012waschallengingyetexcitingforTMEnterprise.Asacustomer-centricbusinessdivision,TMEnterpriseplacesmuch emphasis on customer engagement, consultativesellingandsystematicaccountplanning.Amajorachievementtowardsthisendwasitssalestransformation,whichsignifieda milestone in its strategic roadmap to increase its shareof wallet in three target areas of telecommunications,Information and Communications Technology (ICT) andBusinessProcessOutsourcing(BPO)services.

TMEnterprise’ssalestransformationhasimproveditsoverallefficiency, with greater focus on account planning based onbest practices supported by effective training programmesfor its sales consultants. This translates into better funnelbuildingcapabilitiesandhighersalesconversionrates.

In line with the Group’s focus on the customer experience,TMEnterprisealsointensifieditsServiceImprovementPlan(SIP) to enhance its service level. Of the more significantresultsachieved,therewasa43.0%reductionintotaloutagecomparedtothepreviousyear.Intermsofservicedeliveryandbilling,internalprocesseswasrevisitedandorderprocessingandbillingautomationwasleveragedtoensureahighlevelofserviceacrossitsend-to-endcustomertouchpoints.

With increasing number of Malaysian enterprises venturingbeyondourshores,TMEnterprise isensuringthat it isabletocapitaliseonthegrowingcomplexityoftheirneeds.AtthesametimeTMEnterpriseisalsolookingtotapintoregionalopportunities and has set up a Global Enterprise Team toleverageoninitiativestoattractregionalinvestmentintotheIskandar Development Region (IDR), Johor, while exploringopportunities for business expansion in Singapore andIndonesia.

faCts at a GlaNCE

enTeRPRiSe

revenue

RM1.1 billion

withServiceImprovementPlan

43.0% outage reduction

indataandbroadbandservices

1.0% revenue growth


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FINANCIAL PERFORMANCETM Enterprise’s financial performance in 2012 served as agoodindicationthatkeyinitiativescarriedoutduringtheyearwereaimedintherightdirection.Despiteuncertaintieswithintheexternalenvironment,whichcontinuedtobefragmentedand highly competitive, TM Enterprise posted RM1,100.0million in revenue, marking an increase of 1.1% from thepreviousyear.Thiswasmainlyattributed to revenuegrowthfromdataandInternet/businessbroadband.

PRODUCTS & SERVICES Voice

TM Enterprise maintained a rigorous retention strategy tocombatpricecompetitionbymobileandVoice-over-InternetProtocol (VoIP) service providers. Taking advantage ofcustomisedcallplanssuchasSmartCallandFlexiDestina,theteamwasabletooffercost-effectiveservicetoitscustomersandasaresult,managedtomitigatefurtherdeclineinvoicerevenue.Thisdroppedbyonly1.2%in2012,ascomparedtoaprojectedreductionof6.0%.

Data & Internet/Business Broadband

TM Enterprise continued to focus on service differentiationtoarrestpricecompetitionondataandbroadbandservices.BypromotinganintegratedserviceforconnectivityandICT/BPO with improved network service quality, it managed toincreaseitsdataandbroadbandrevenueby1.0%amidheavycompetitionbyotherend-to-endmanagedserviceprovidersandserviceintegrators.

RECOGNITIONTenagaNasionalBerhad(TNB)recognisedTMasaPreferredService Provider in 2012, according TM high scores in thefollowing areas: technical capability, project management,pricing and after-sales support. This was based on thefollowingservicesrenderedtoTNB:

1. ContactCentreTechnology(hardwareandsoftware)a. CallManagementSystemb. WorkForceManagementc. CustomerRelationshipManagement–TNBOutage

ManagementSystems(TOMS)2. ContactCentreAdvisory3. IntegrationservicebetweenTOMSandTNBsystems4. SMSgateways5. Toll-Free(15454)and(1300-88-5454)

PROSPECTSTM Enterprise will continue to drive businesssustainability of TM Group in the upcoming year.In order to do so, it will continue to capitalise ondomestic opportunities and proactively seek specificregionalmarketprospectstoaccelerategrowthwithcustomisedproductsandsolutions.

Malaysia Airlines MH Net Project Handover.

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OVERVIEWIn its quest to become the Government of Malaysia’s (GoM)trustedICTpartner,TMGovernmentsegmentsecuredthreemajor initiatives under the Government ICT infrastructureconsolidationprogrammein2012.Thesewere:theexpansionof government intranet and Internet services (EG*Net),government e-mail and unified communication services(1GovUC) and government call centre (1MOCC) with otherongoing big projects such as PDRM*Net, Sabah*Net,Kastam*Net, SUKMA Pahang and Malaysia EmergencyResponseServices(MERS)999Expansion.

SUSTAINABILITYSince 2010, TM Government has acquired the reputation ofbeingaglobalprovider.Tomaintainthisposition,itcontinuestopursueserviceexcellenceandpushforgreateroperationalefficiencies.

TM Government works very closely with its customers ateverystageofaproject–fromthedevelopmentofsolutionsto the implementation and operation. Both parties take onthemanagementof risks toensure theproject’ssuccessfulimplementationandlater,itssustainability.Withfast-changingtechnology shortening product lifecycles, TM Governmentis offering broader ICT solutions beyond network. In linewiththis,allsalesandtechnicalstaffcontinuouslyundergocomprehensive training beyond their familiar territory toimprove the team’s competency and readiness to grab ICTbusinessopportunitiesasthesearise.

FINANCIAL PERFORMANCETMGovernment’sstrategyofpushingitsteamtothinkbeyondnetworkhasledtomanynewbusinessopportunitiesinICT.Asaresult,itsICTbusinessgrewby29.2%in2012,becomingthesecond largest business revenue to TM Government, whosetotalrevenuegrewby22.4%.

faCts at a GlaNCE

GOVeRnMenT

ICTbusinessgrowth

29.2 %

governmentemployeestobelinkedto1GovUC

200,000

revenuegrowthforDataService(RM782.7million)

30.5 %


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PRODUCTS AND SERVICESVoice Service

Despite the popularity of smartphones, fixed telephonyremainsthepreferredvoicecommunicationinthegovernmentsector.AlthoughVoicerevenuedroppedby1.3%,thenumberof telephone installations remained unchanged. To managethis natural decline, TM Government will continue to offerFlexiDestinaandPrivilegePlans,andinthelongrunintegrateVoice and IP services to transform the Voice Business toData Business or ICT Business. With the scheduled fullimplementation of 1GovUC to 200,000 users in 2013, this isexpectedtoserveasaplatformforthetransformation.

Data Service

Tomeetitstargetof95.0%onlineservicesby2015,theGoMhastoensureallitsofficeshavehighbandwidthacccess.Thus,inthefirsthalfof2012,theGovernmentissuedabulkorderforEG*Nettobedeliveredbyyearend.Despitethenumberandgeographical spread of government offices nationwide, thebulkorderswerefullydeliveredbyyearend.Withmostofthegovernment’snetworknowrunningonhighbandwidth,GoMcouldeasilysubcribetohighspeedbandwidthinfrastructure,boostingDataServicerevenueinthelongrun.

In 2012, Data Service revenue grew by 30.5% to RM782.7million.

Internet Service

TheexpansionofEG*NetservicestoincludeInternetoffersanopportunityforTMtoprovideICTservicessuchassecurityandcloudcomputing.Inthelongrun,thiswillcontributepositivelytoTMGovernment’srevenue.

Meanwhile,InternetviaDirectOverMetro-E(DOME)continuestobeinhighdemandatpublicuniversities.WiththenumberofGen-Yuniversitystudentsescalating,andtheirincreasingdependence on learning on the Net, demand for higherbandwidthfrompublicuniversitiesisexpectedtogrow.

ICT Projects

1MOCC, 1GovUC, Universal Service Provision (USP) andMERS999 were among the major projects that drove ICTrevenue in 2012. All these projects form a part of GoM’sstrategy toboost itsoperationalefficiencyandconnectwiththepublicmoreeffectively.

1MOCCcentralisesallcallsandoperates24/7toanswerpublicenquiriesandtendtocomplaints,suggestionsandfeedbackviaphonecalls,SMS,fax,e-mailandthesocialmedia.

The1GovUCproject,undertheBusinessServicesNKEA,aimstoprovideacentralisedintegratedcommunicationsservicefortheGoMthatincludese-mail,calendering,taskmanagement,instantmessaging,webconferencingandtelepresence. It istargetedthat200,000governmentemployeeswillbelinkedbythisservicein2013.

PROSPECTSThe GoM’s whole-of-government ICT infrastructureconsolidationhasbeenbeneficial toTMGovernmentandwillcontinuetodriveitsgrowth.FurtherexpansionoftheEG*Netisexpectedin2013astheGoMstrivestomeetits95%onlineservicestarget,pushingtheneedfor additional bandwidth. Meanwhile, success of the1MOCChasspurredtheGoMtoexpandthisservicetomorethan700agenciesnationwideandthisisexpectedtocontributepositively toTM’sbusinessoutsourcingrevenuewhileprotectingitscorebusiness.Similarly,the1GovUCproject,whichiscurrentlybeingdeployedto 20.0% of the entire civil service, offers businessopportunities that will strengthen growth of the ICTbusiness.

JustasTMGovernment’sinvolvementinkeystrategicGoMprojectstoimprovepublicserviceintensifies,itscontribution toTM’s financialperformancewillgrowprogressivelystronger.

1Malaysia One Call Centre (1MOCC) Launch.

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WhOLeSaLeBUSineSS


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WhOLeSaLeBUSineSS OVERVIEW

The TM Wholesale (TMW) line of business, which includeFiberail Sdn Bhd (Fiberail) and Fibrecomm Network (M)SdnBhd (Fibrecomm), isTM’sbusinessandmarketingarmfor telecommunications infrastructure and access services.StrategiccollaborationswithKeretapiTanahMelayuBerhad(KTMB), Petrofibre Network Sdn Bhd and Tenaga NasionalBerhad (TNB) enable TMW to access KTMB’s and PetronasGas’corridors,aswellasTNB’shighvoltageandlowvoltagetransmission lines, thus creating unparalleled fibre opticsnetworkcoveragenationwide.

TMWoffersacomprehensiverangeofwholesaleproductsandservicestoalldomesticnetworkoperatorsincludingnetworkfacilitiesproviders(NFP),networkserviceproviders(NSP)andapplicationserviceproviders(ASP)licensedbytheMalaysianCommunicationsandMultimediaCommission(MCMC).

Supporting Government InitiativesBraced with its unique strengths in telecommunicationsinfrastructure coverage and ability to provide total businesssolutions, TMW positions itself as a neutral infrastructureserviceprovidertodomesticlicensednetworkoperators.Thissupportsthegovernment’saspirationfortelecommunicationstocontributetothecountry’sgrossdomesticproduct(GDP)byprovidingICTaccessibilitytoall.Havingembracedtheconceptofopenaccess,TMWispromotinggrowthoftheindustryandallowingoperatorstoofferthenationbetterandmorecost-effectiveICTservices.

faCts at a GlaNCE

fromWholesaleEthernetcontribution

33.0 % revenue growth

inIPdata

27.6 % revenue growth

WholesaleEthernetServiceProvider2012

asia Pacific’s Best

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FINANCIAL PERFORMANCEWholesale Business recorded consolidated total revenue ofRM1,065.8millionin2012withaslightdecreaseby0.2%fromRM1,067.5millionreported in thecorrespondingperiod lastyear.Thiswasaffectedbylowervoiceminutesandterminationoftraditionaldataservices.

Nevertheless, the lower revenue from voice services andtraditional data has been cushioned by significant growthof 27.6% in IP data and the recognition of RM4.6 millionBroadband for General Population (BBGP) grant revenue.Infra services also recorded growth of 4.7% despite a pricerevisionundertakenin2012.

WholesaleBusinessrecordedhigheroperatingcostofRM937.3millionthisyearwhichishigherby2.2%ascomparedtoyear2011ofRM917.0million.Thisismainlyduetohigherinternalrecharges,higherleasedcircuitchargesincurredbyFiberailand Fibrecomm, higher manpower related costs (in view ofinclusionofnewSRMunitandsalaryrevision)andhighercostondeploymentofWiFiprojectduring2012.

Asaresultofloweroperatingrevenueandhigheroperatingcost, Wholesale Business reported lower EBIT performanceofRM132.7million,decreasedby12.4%ascomparedtoyear2011ofRM151.4million.

OPERATIONSTM Wholesale’s extensive wired network has undergone amassiveupgrade,heraldinglarge-scalemigrationontoanewgeneration IP-based infrastructure. The fibre-based HighSpeedBroadband(HSBB)networkdeployedisacknowledgedasoneofthefastestandmostcost-efficientcommunicationtechnologies available, offering the capacity, flexibility andspeedtocatertogrowingdemandforapplications,solutionsandcontentofanintegratedandenhanceddigitallifestyle.

Sincethismigration,TMWhaslaunchedtwomajorwholesaleservices – HSBB Transmission and HSBB Access. Theseenableserviceproviderstoofferhighspeed,highlyscalableand future proof backhaul services that include bandwidthflexibility and multiple-class quality of service options intransportingvideo,dataandvoiceirrespectiveofdistance.

High Speed Broadband Services TMhasstrengtheneditsHSBBservicestosupporttheneedsof3G,WiMax,LongTermEvolution(LTE)andWirelessLocalAccessNetwork (WLAN)serviceproviders.Demandforhighspeed IP-based services is increasing as service providersseek scalable networks to accommodate their mobile andbroadbandcustomerswhoarelookingforintegratedIP-basedsolutionsandbandwidth-hungryapplications.Inotherwords,these wholesale services allow network operators to growtheir network according to their business expansion plansandenablethemtosupportmultiple IPandnewgenerationnetworkapplications.

TMW is also creating a level playing field for licensedaccess seekers to provide IP-based value-add content andapplications to customers in HSBB areas nationwide. InMarch2012,RedtoneMarketingSdnBhdsignedupforHSBBservices, joining three other telcos – Maxis Berhad, CelcomAxiataBerhadandPacketOneNetworks(Malaysia)SdnBhd–whichhadsignedupforthewholesaleservicein2011and2010.

Wholesale Ethernet WholesaleEthernet(WSE)providesEthernetlineconnectivityto service providers licensed by the MCMC at transmissionspeedsrangingfrom30Mbpsto10Gbps.ComplyingwithMetroEthernet Forum (MEF) standards, WSE provides attractiveofferings to address ever-growing market demands, drivenbytheneedsofWiMAXserviceproviders,Mobile/Long-TermEvolution (LTE) service providers and wireless LAN serviceproviders.

In 2012, WSE’s contribution to TMW’s revenue growthincreased by 33.0% as compared to 2011. This growth hasbeen supported by increasing demand for high speed IP-basedservicesasserviceprovidersseekscalablenetworkstoaccommodatetheirmobileandbroadbandcustomers.

TMW’scontributiontothelocaltelecommunicationsindustry,in particular the IP and data bandwidth businesses, wasrecognised when it was presented the Asia Pacific BestWholesaleEthernetService2012awardduringtheWholesaleEthernetForum inShanghai,China inDecember2012.ThiswasthesecondyearTMwasbeingnamedthebestwholesaleEthernet service provider in the Asia-Pacific. Its first awardwas presented at the Carrier Ethernet Service ProviderAwards 2011 in conjunction with the Carrier Ethernet APACconference2011inSingapore.TheseawardsbeartestimonytoTMW’sstrengthintheindustry.

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VoIPWholesale Voice over Internet Protocol (VoIP) service isoffered mostly to application service providers (ASPs) whostand tobenefit from theuseofTM’sextensivenetwork fortransportation, origination and/or termination of calls. Thisallows them to expand their VoIP business quickly and atminimum cost. TM Wholesale is on the verge of upgradingitsVoIPIPterminationtoanewgenerationnetwork(NGN)tofurtherincreasevoicequality,evenforIP-basedcalls.

Interconnect MinutesInterconnectMinutes,beitfixedormobile,isaserviceprovidedby connecting other licensed network operators’ (OLNOS’)point of interconnect (POI) with TM’s POI. The arrangementenablesendusers fromTM’snetwork tocommunicatewithOLNO’sendusers.Ontopofnormalvoicecall,TMalsooffersspecial services such as the emergency service, operatorassisted service and free phone service with competitiverates,asstipulatedinthenewMandatoryStandardonAccessPricing(MSAP).

PROSPECTSAstheworldbecomesdominatedbyincreasinglyhigh-tech and sophisticated devices that converge voice,data and video services onto a single screen, thereis added pressure on service providers to facilitateseamlessconnectivity.Theyear2013promises tobeexciting as service providers try to outdo each otherin meeting customers’ demands and capturing newsubscribers.

December 2012 marked an important milestone inthe Malaysian telecommunications industry whenthe Malaysian Communications and MultimediaCommission (MCMC) awarded the 4G-LTE spectrumto eight companies. Deployment of the LTE networkwill see mobile network operators, WiMAX providersaswellaswirelessLANprovidersdemandforhighercapacity and reliable backhaul access in order toprovidequalityconnectivityformobilebroadband.

In line with the government’s aspiration to positionMalaysiaasaninternationalhubundertheEconomicTransformation Programme, TM initiated My1Hub,that offers total solutions, including Internet andbandwidth services, to domestic and global serviceproviders, Internet service providers, applicationserviceprovidersaswellasenterprisesegmentanddatacentreplayers.

TMW’sbusinessispoisedtoenablethisconvergenceby playing a key role in the Group’s aspiration to bethe country’s information exchange and, ultimately,advancing Malaysia as a communications hub in theAsiaregion.

This is the second year TM retained its position as Asia Pacific’s Best Wholesale Ethernet Service Provider.

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GLOBaLBUSineSS


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OVERVIEWTM Global seeks to be one of the world’s leadingcommunications service providers by becoming a one-stopsolutionscentreservingtheneedsofcustomersinMalaysiaand more than 50 countries. TM Global offers wholesaledata and voice products and services to the domestic andinternational carrier segment, including multinationalcorporations(MNCs),domesticbusinessesandalsonationalandlocalgovernmentorganisations.

Withitsextensiveconnectivity,TMGlobalispoisedtopositionMalaysiaastheregionalhubofchoiceandthedigitalgatewayto Southeast Asia. TM Global complements its connectivitywithinnovationtoprovidecustomisedsolutionsinhighgrowthpotentialmarketsintheAsia-Pacificregion.

2012beganwiththelaunchoftheTMMediaDeliveryService(TMMDS)inFebruary,createdincollaborationwithOctoshape,an industry leader in global streaming technologies. TM

MDS enables high definition (HD) video streaming throughthe Internet for millions of users with no intervention, noadditionalcostandnowastedbandwidth.Itisequippedwithfeatures such as digital video recording (DVR) for users toreverse or jump forward in time during live streaming withlightning-fastchannelswitching.

TM Global also entered into a strategic partnership withInteliquent,a leadingproviderofglobal interconnectionandinteroperabilitysolutionstoofferLayer2EthernetoverMPLS(Global Ethernet) to locations currently off-net. ThroughInteliquent’s points of presence (PoP), TM has significantlyincreasedtheavailabilityofitsEthernetcoverage,especiallyinEuropeandNorthAmerica.Similarly,throughTM’sregionalcoverage, Inteliquent has extended its network reach intoAsia-Pacific.

faCts at a GlaNCE

inrevenue(RM1,146.4million)

6.2% increase

spanningmorethan60,000fibre-routemilesaroundtheglobe

10 submarine cable systems

fromvoiceanddataservices

RM953.9 million revenue

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TMGlobalownsorleasescapacity inclusiveofVoice&Datawith Internet on more than 10 submarine cable systemsspanning more than 60,000 fibre-route miles around theglobe. During the year, the second phase of its privateinternational submarine cable system Cahaya Malaysiawas completed, connecting Malaysia and Japan to theTseungKwanOlandingstationinHongKongandwasreadyfor service on 19 February 2013. The first phase of CahayaMalaysia connecting Malaysia to Japan has been carryingInternet traffic since 20 August 2012. Cahaya Malaysia willform the backbone linking TM’s first data centre in HongKong,theVADSDataCentre,toMalaysiaandJapan.

Besides Cahaya Malaysia, TM is a member of varioussubmarine cable consortiums which connect Malaysiaglobally. These include the Asia America Gateway (AAG),Asia-Pacific Network 2 (APCN2), South East Asia MiddleEast-WesternEuropeCableSystem3(SMW3),SEA-ME-WE4(SMW4)andtheDumai-MelakaCableSystem(DMCS),whichlinksIndonesiaandMalaysiaacrosstheStraitsofMelaka.

TMGlobalcreatesstrategicnetworkswithmediapowerhousesworldwide and participates in international events forbrand exposure and enhanced market mindshare. In 2012,it positioned TM in events at the PTC in Hawaii, CapacityAsia in Bangkok, Capacity Europe in Amsterdam, CapacityMiddleEast inDubai, ITWinChicago,APRICOTinIndia,andCommunicAsiainSingapore.

BUSINESSS OPERATIONS

GLOBAL SALES OFFICE & PRODUCT HOUSE TM Global is headquartered in Menara TM, Kuala Lumpur,and has four regional offices in Singapore, the UK, US andHongKongaswellasoffshoreoffices inPrague,DubaiandTaiwantosupporttheEasternEurope,MiddleEastandChinamarkets.ItalsohasdedicatedsalesagentsinIndonesiaandBangladesh.

Account executives of TM Global manage businessrequirements from North and South Asia, Europe, Oceania,theAmericas,MiddleEastandAfricaregions.Theyhavealsoestablished relationships with other telecommunicationscompanies in Singapore, the Philippines, Brunei, Indonesia,Thailand,Myanmar,Cambodia,LaosandVietnam.

GLOBAL PRODUCTS & SERVICES TMGlobaloffersanextensiverangeofproductsmanagedbytheGlobalDataMarketingandGlobalVoiceMarketingteams,ensuring customised solutions for specific business needs.This is supported by excellent after-sales and technicalservices.

Voice ServicesBilateral VoiceVia bilateral arrangements with foreign telcos, TMGlobal is able to provide the local loop and the last milesolutions for fixed line networks in Malaysia. Together withinter-connection via submarine cables, satellites andmicrowaves links, TM offers the highest quality and claritywhenterminatingMalaysiantraffic.

Wholesale VoiceTM Global provides termination services to more than 200destinationsworldwideacrossits105bilateralpartners.ThisinternationalserviceisofferedviaVoiceoverInternetProtocolandthePublicSwitchedTelephoneNetwork.

i. Voice over Internet Protocol (VoIP) VoIPenablesserviceproviderstoestablishandoperate

phone-to-phone voice and fax services. In additionto creating value-added applications to grow their IPportfolios.VoIPalsoenablesTMGlobaltoofferamixedportfolio of national as well as international trafficterminationsandenhancedapplications.

ii. Public Switched Telephone Network (PSTN) PSTN is the preferred choice for voice calls because

of its incomparable connection reliability and audioclarity.Thisserviceisavailabletoover200internationaldestinations, by enabling terminations via direct andtransitarrangementsusingsubmarinecables,satellitelinksandterrestrialconnectivity.

International Value Added ServicesThesearenon-coreservicesprovidedtofulfilabroaderrangeofcarriercommunicationsrequirements.

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i. Next-Generation Network (NGN) Global NGN is the most advanced integrated voice network

offering multiple protocols interconnect type, VoIPand Time Division Multiplexing. NGN expands TMGlobal’s coverage throughout several continents withimplementedsitesinNewYork,London,HongKongandSingapore. Telcos based around these locations enjoynear-endreachability,whichreduceoperatingcostsandboostprofitability.

ii. ISDN Hubbing ISDN Hubbing allows TM to offer ISDN services on a

transit basis, not only for terminations in Malaysia butalso for third-world countries ISDN destinations andotherdestinationsworldwide.

iii. International Freephone Services (IFS) via VoIP IFSviaVoIPofferscustomerstheoptionofhavinganIFS

serviceonTM’sreliableandefficientVoIPnetworkswithcheaperpricingstructures.

Data ServicesGlobal Ethernet Services (GES)i. Global Ethernet Virtual Private Line (EVPL) TM’s Global Ethernet provides secure point-to-point or

point-to-multipoint Ethernet bandwidth connectivity.ThisservicerunsoverTMGlobal’sprivateglobalMPLS-IP network which allows customers to set up secure,private bandwidth connectivity to global businesspartners/suppliers or the Internet. Customers can buyjust the amount of bandwidth needed, and easily addbandwidthasdesired.

ii. International Ethernet Private Line (IEPL) This end-to-end Ethernet bandwidth solution provides

dedicatedpoint-to-point,cross-borderconnectivityuptoeach customer’s premises. The service uses a reliableandsecureSDH/DWMplatformathighspeed,withtheoptionofscalableandfasterupgrades.

Global VPN ServicesA Virtual Private Network (VPN) tunnels through anothernetwork, linking remote offices or individual users to anorganisation’s network. This service is used extensively bybusinesses to create Wide Area Networks (WANs) acrosslargegeographicalareas,providingsite-on-siteconnectionstobranchoffices.

TheGlobalIPVPNisafullymanagedend-to-endvirtualprivatenetworking solution to provide highly efficient and reliableconnectivityatcompetitiveprices.TMGlobalhasitsownnodesin Bahrain, Egypt, Sri Lanka, Indonesia, Singapore, HongKong, Taiwan, Japan, South Korea, Los Angeles, New York,Ashburn, Palo Alto, San Jose, Miami, London, Amsterdam,FrankfurtandMalaysia. Italsohasexpandedconnectivitytomorethan100countriesthroughglobalpartnerships.

IP Services Delivered over TM Global’s international networkinfrastructure with Points of Service located worldwide, TMGlobal’s IP Network Capacity (AS4788) stood at more than1Tbpsattheendof2012.

TMGlobal’sIPTransitisapremiumInternetservicedesignedfor ISPs,networkandcontentserviceprovidersthatrequirehighspeedanddedicatedInternetaccess.Todate,TMGlobalhas 18 PoPs at key locations worldwide that support IPv4and IPv6 on a dual-stack platform which provides the bestinterconnections.WithaflexiblerangeofofferingsonSDHandEthernet-basedplatformsfrom2Mbpsto10Gbps,customershavetheoptionofbundlingwithcolocation,routerleasingandvariousaccessmedia.

TheTMGlobalIPserviceisequippedwiththelatestsecurityfeaturessuchasBlackHoleandCleanPipetosecure its IPnetworkagainstanyunwantedsecuritythreats.

Media Delivery Services TM Media Delivery Services (TM MDS) is featured onOctoshape’sInfiniteHDTMPlatformleveragingonitspatentedresiliencyandthroughputtechnologies.ItissettodeliverthehighestHDqualitystreamswithoutbuffering.ThistechnologyenablesTMtoprovidesolutionsforcontentownerstodeliveronline video over best-effort public networks to the largestaudienceswiththehighest-qualityviewingexperience.

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Global Business

Global Hosting ServicesEquippedwithstate-of-the-artfacilities,VADSDataCentreinHongKongoperateswithservicereliabilityandinfrastructuresecurityofthehighestlevel.Itisaninnovativehubdesignedwith fluid functionality in mind and built with Tier III+specifications, hence is capable of meeting the needs ofeven the most demanding business operations. It serves toenhancekeyaspectsofcustomers’business,fromapplicationperformancetoemployeeproductivity.

International Bandwidth Services International Bandwidth Services capitalise on TM Global’sextensive terrestrial, submarine fibre optics and satelliteinternational networks to enable connectivity beyondMalaysianshores.

International Private Leased Circuit (IPLC)isadedicatedpoint-to-point connectivity via international submarine cables,terrestrial links or satellite from both ends terminatingoutsideMalaysia.

Bandwidth Transit is a dedicated end-to-end connectivityoriginatingandterminatinginaforeigncountrybuttransitingviaMalaysia.

Bandwidth Backhaul is a dedicated capacity between cablelanding stations or border stations in Malaysia where thecustomerhasitsowncapacityinaninternationalsubmarinecableorterrestrialfacilities.

Bandwidth Interconnectionlinkstwosubmarinecablesystemsowned by a customer or by TM Global itself at TM Global’scablelandingstationsinCherating,Mersing,KualaMudaandMelaka.

Global VSATreferstotheprovisionofTMGlobal’sVerySmallAperture Terminal (VSAT) services. This service covers thelease and installation of VSAT equipment inclusive of spacesegmentsofacustomer’spremisesinMalaysiatoalocationoutside Malaysia. The service uses satellite-based SingleChannelPerCarriertechnology.

FINANCIAL PERFORMANCETMGlobalreportedaconsolidatedtotalrevenueofRM1,146.4millionin2012,anincreaseof6.2%fromRM1,079.0millionin2011.VoiceanddatarevenuecontributedRM527.1millionandRM426.8millionrespectivelyin2012.

Whilemaintainingdatarevenue,voicerecordedanincreaseof10.3%ascomparedtoyear2011.Basedonsales,SouthAsiawasthelargestrevenuecontributor(31.7%),followedcloselybyOceaniaandNorthAsia.

PROSPECTSTMGlobalsupportstheGroup’svisionoftransformingintoaregionalpowerhouse,andwillmaintainitsstrongforward momentum by focusing on: 1) dominatingthe premise; 2) clawing back mobile traffic; and 3)becomingtheaggregatorofaggregators.

TM Global seeks to collaborate with internationalpartners to extend its coverage to the rest of theworldandpromoteTMasthesourceforinternationalcontent,theconnectivityhubofchoicefortheregion,and the one-stop shop for smaller regional carrierswantingtogoglobal.

TM Chairman, Dato’ Sri Dr Halim Shafie officiates the launch of TM’s first data centre outside of Malaysia – VADS Data Centre, Hong Kong.


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VaDS

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OVERVIEWVADS Berhad (VADS) is one of Malaysia’s leading managedInformation and Communications Technology (ICT) andBusiness Process Outsourcing (BPO) service providers.Starting as a joint venture between IBM Global NetworkServices and Telekom Malaysia Berhad (TM) in 1991, todayitisawholly-ownedsubsidiaryofTMservingmorethan500mediumto largebusinessesacross industries.VADSbringstogetherpeople,processesandtechnologiestoenablemoreeffectiveanddynamicuseofICTandBPOsolutions.

Itseekstoempowerbusinesseswithvalue-basedinnovativesolutions and services by offering its expertise so thatcustomerscanfocusontheircorebusiness.Thisambitionissupportedbyateamofenergeticandpassionateindividualsfromdiversebackgroundsandculturesthatpossesstherightmix of skills and experience from operations to research,architecturedevelopment,solutionsandprojectmanagement.

FINANCIAL PERFORMANCE Asatfinancialyearendof2012,VADSGrouprecordedRM805.7millioninrevenueofwhichBPObusinessbroughtinRM345.9millionwhereasRM274.1millionwasfromtheICTbusiness.TheGroupcontinuestogainmomentuminthesefieldswithnewrevenuestreams.ForICT,newproductswereintroducedsuch as Managed TelePresence and Cloud Services, albeitbotharestillinitsinfancystage.ForBPO,afewbigprojectsweresecured,especiallyfromthegovernmentsector.Movingforward,newinitiativesarealreadylineduptofurtherboostthefinancialperformanceoftheGroup.

faCts at a GlaNCE

in13deliverysitesin2countries

>5,000 Contact Centre seats

14locatedstrategicallynationwide,and1inHongKong

15 Data Centres

forICT/BPOandgrowing

151 certified professionals

connectedtoVADSManagedTelePresenceServices

80 countries


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SERVICE OFFERINGSVADS offers holistic and seamless end-to-end solutionscuttingacrossconnectivity,ICTandBPOservicestofulfillitscustomers’needs.

ICT ServicesThe company provides complete end-to-end ICT solutionsthatarestableyetflexibleandscalabletoenablebusinessesto be more agile and react more quickly to changes in theoperating environment, bringing together people, processesand technologies. Its services empower organisations to bemoreefficientandproductive.

VADS has 15 data centres, 14 located across Malaysiaand one in Hong Kong. These are highly secure, with ISO27001-certified infrastructure, and Tier III-ready with multi-gigabitconnectivity.VADSisconfidentofaccelerateddemandfor its managed data services, hosting as well as disasterrecoveryservices.

A recognised leader in the managed service industry, VADShaswonfourconsecutiveFrost&SullivanMalaysiaExcellenceAwards for the Managed Service Provider category. Tomaintain its leadership position, it constantly enhances itssuite of offerings which include Managed Security Services,Managed Unified Communication & Collaboration Services,ManagedLANServices,ManagedWANAcceleratorServicesandManagedVisibilityServices.

TofurtherstrengthenitsICTdelivery,meanwhile,VADSbelievesindevelopinglocalin-houseICTspecialistcapabilities.In2012,itbecamethefirstMalaysia-basedICTcompanytoachievetheCiscoManagedServicesMasterChannelPartnercertificationafterpassingastringenttechnicalandoperationalaudit.ThisenablesVADStoofferCisco-basedmanagedservicesgloballyand testifies to VADS’ high level of competency and servicedelivery comparable to that of global ICT providers. Amongits other technology accolades include being a Cisco GoldCertifiedPartner,aJuniperElitePartner,RiverbedServicesPlatformProvider,VMwareServiceProviderPartnerandHPSolutionsSilverPartner.

In2012,VADSsigneditsfirsttelepresenceglobalcollaborativeagreement with AT&T, enabling customers to enjoy betterquality interaction and collaboration with other companiesacross multiple locations worldwide, minimising travel costand time. The AT&T Business Exchange directly supportstelepresenceinmorethan130companiesandorganisationsand over 50 additional customers with thousands oftelepresence managed or customer owned endpoints in 80countriesworldwide.

VADSplanstoexpanditspresencetoothercountriesthroughfurtherinterconnectionandcollaborationwithmorecarriersandtelepresenceproviders.Thisisinlinewiththegovernment’sNational Key Economic Area focusing on Communications,ContentandInfrastructure,whichlaysemphasisonenhancedcommunications through telepresenceand teleworking.TheVADSTelePresenceExchange(VADS-TPX)coreinfrastructureresidesinVADSDataCentreandrunsonahighlysecureandresilient network catering for both intra and inter-companyhighdefinitionimmersiveconferencingfromprivateroomsaswellaspublicroomfacilitieshostedbyVADSanditspartners.

Atthesametime,VADShasbeenenhancingitscloudservicesinlinewithTM’sroadmaptowardsbecomingaprominentICTplayer in Malaysia while supporting the national agenda tobeakeyenablerforlocalSMEs,especiallylocalIndependentSoftwareVendors(ISVs).

VADS has launched a full suite of managed cloud servicesincluding Infrastructure-as-a-Service (IaaS), Platform-as-aService(PaaS)andSoftware-as-a-Service(SaaS).Inaddition,withMicrosoftas itssyndicationpartner inMalaysia, itnowoffersMicrosoftOffice365aspartofitsSaaSportfolio.

VADSforeseesmorepartnershipswithkey industryplayers,technology partners and ISVs in the coming years to growits cloud offerings. In 2012, it forged partnerships withthe Multimedia Development Corporation (MDeC) andTechnoprenuers Asssociation of Malaysia (TeAM) which giveitaccesstomorethan500ISVswhocannowleverageontheVADSCloudEnablementProgramme.

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VADS

BPO Services VADS BPO gathers best practices from the industry andexisting clients and deploys these on a single and unifiedplatformacrossall itsmanagedcontactcentrescomprisingmore than 5,000 contact centre seats across 13 deliverycentres in Malaysia and Indonesia. Towards this end, it hascraftedasetofcomprehensivecontactcentreprocessescalledVibrant™ (VADS Intelligent Business Process OperationalMethodology), which drives client programmes such astelemarketing, customer care and the technical helpdesk,amongmanyothers.

Its growth over the years has been the result of buildingrevenue generation, customer management, knowledgeprocess outsourcing, human capital management, backoffice processing, business suites and facility management,andrevenueassurance.Asaresult, thecompanycontinuestostrengthen itsBPOfoothold in thedomesticandregionalmarkets.

2012wasagoodyearforVADSBPO.Akeyachievementwaswinning the 1Malaysia One Call Centre (1MOCC) project inthefourthquarter.1MOCCisoneoftheNationalBlueOceanStrategy(NBOS)projectsledbytheMalaysianAdministrativeModernisation and Management Planning Unit (MAMPU)under the Prime Minister’s Department. The challenge forthisprojectwastorecruit,educateandtraincustomerservicerepresentatives in less than two months, which VADS BPOmanagedtoaccomplish.

People development is given top priority in VADS andcontinuous training is provided to equip customer servicerepresentativeswiththerightblendofsoftandtechnicalskillstoserveclientsbetter.

The company’s Indonesian operations, PT VADS, beganin December 2008, capturing the offshore contact centrebusiness, Its core services are in Contact Centre ServiceSolutions,CustomerServiceLearningCentre,HumanCapitalManagementandDataCentreCo-Location.Ithastwocentres,in Jakarta (Puri VADS) and Yogyakarta (Wisma Arcade). PTVADS is consistently looking for ways to grow via sustainedperformanceandexcellentservicedelivery.

The company’s efforts to expand its services while placingemphasisonexcellentcustomerdeliveryhavepaidoff.VADSBPOgarneredmorethan35awardswhilePTVADStookhomesixawardsatdomestic, regionaland internationalevents in2012.TheseincludedsixawardsattheContactCentreWorldAwards2012inLasVegasand15CCAMawardsincludingBestof theBestBPOOutsourcerof theYear2012at theContactCentre Association of Malaysia’s Annual Dinner. VADS wasalso honoured to receive the Majikan Prihatin Award for itsStep-Up initiative from the Ministry of Women, Family andCommunityDevelopment.

Award Winning Team: (L-R) Anna Yee, Derrick Yap and Mohd Fauzil with the six Contact Centre World Awards won by VADS.

Management team of VADS and AT&T at the Signing Ceremony to mark the collaboration between the two companies for VADS Managed TelePresence Services.


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PROSPECTSVADSaimstocontinuetoaddvalueto itscustomersthrough innovative solutions and services basedon the industry’s most advanced ICT solutions. Itfurtherseeks tobecomea trustedpartnerofchoicebyempoweringbusinesses togrowwith its ICT/BPOservices. Finally, in line with TM, it will continue tofocusonthecustomerexperienceandprovide‘ServicewithHeart’.

VADS Managed TelePresence Services. It directly supports telepresence in more than 130 companies and organisations in 80 countries worldwide.

VADS Managed Data Centre Services. The Company has 15 data centres, 14 located across Malaysia and one in Hong Kong.

VADS Business Process Outsourcing (BPO) Services. It focuses on building and growing revenue generation, customer management, knowledge process outsourcing, human capital management, back office processing, business suites & facility management and revenue assurance.

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neWMeDia


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onHyppTV,consistingof47premiumchannels,24freechannels,22VoDand19interactivechannels

• 27High-Definition(HD)channels

• 3,000VoDhourson22channels

• Absoluteportalhasreached24millionvisitorsandmorethan500,000membersperyear

has625contentofferingscomprising55multi-purposeapplications,126filmsandanimations,46onlinegamesand398musicpieces

pageviewsmonthlybyInternetYellowPages(IYP)visitors

• YellowPagesMalaysiaisnowcompatiblewithIOS,Android,WindowsandBlackberrydevices

112 channels

My1Content

2.5 million

OVERVIEWIncorporatedon15July2010,NewMediaactsasTM’smediaand online product house offering media and online valueaddedservices to themarket.CapitalisingonStreamyxandUniFi subscribers, New Media is anchored by four strategicpillarstosupportTMGroup’sbusiness,namelyHyppTV,Value-AddedServices,Directory&AdvertisingandMy1Content.

HyppTVTaglinedPrimetime, Anytime, Everytime,HyppTVwillcontinue to forge its identity as a key component of TM’sUniFipackages.HyppTVhaspositioneditselfasthelocalTVsubscription service that offers bundled high-quality up-to-datecontentwithpremiumchannels, video-on-demandandinteractive services. Since its debut, HyppTV has grown toincludeupto112channels.

E-Commerce and Value Added Services (VAS) This pillaroffers services online and via the mobile space with ane-commerce engine. Ultimately, VAS enables business andindividualuserstoaccessitsservicesmoreeffectively,whileTMwillbeabletosupportitsusersmoreefficiently.

Directory & Advertising Yellow Pages has evolved from theprinttothedigitaldomain,andisnowdebutinginthemobilespace.Theseamlessmultimediaofferingenablesadvertisersto extend their reach in a targeted manner, while providingenduserswithcustomisedlistings.

My1Content or Content Service Delivery Platform (CSDP),promotes local content innovation and assists small andmedium content providers to market their content andapplications.Themarketplaceisscaledtoallowregionalandglobal communities to take part in the local digital market.My1Content currently provides an integrated platform forvideos,music,movies,onlinegamesandapplications.

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New Media

KEY INITIATIVES HyppTV In 2012, HyppTV continued to further grow its footprint andcementitspositionasaviableTVsubscriptionentertainmentalternative in Malaysian households through the additionof more exclusive and never-before-seen channels andprogramming. Value packs such as the Platinum Pack,launched in March 2012 offering subscribers 30 premiumchannelsforonlyRM30,weremetwithverypositiveresponse.Underpinning this demand were the twin propositions ofa TV subscription service that is uninterrupted by weatherconditions, and a comprehensive on-demand service whichallows viewers the flexibility to schedule their own viewingandtowatchwhattheywantwhentheywant.

Live Channels

2012 was a watershed year in which HyppTV introducedpremium live sports content to its line-up of channels. FoxFootballChannel,anew24/7footballchannel,haditsAsianpremiereonHyppTVwithlivecoverageofSpanishLigaBBVAmatches,theDutch,RussianandArgentinianfootballleagues,aswellasshowcasingChelseaandManchesterCityclubTVcontent.

HyppSportsHD,HyppTV’s flagshipsportschannel,wasalsolaunched in collaboration with ASN (All-Sports Network)focusing on American sports. With HyppSports HD and itscomplementarychannelsHyppSportsHD2,HyppSportsHD3andHyppSports4,HyppTVhasthedistinctionofbeingtheonlyMalaysianTVprovidertosimulcastuptofourlivematchespermatchnightoftheUEFAChampionsLeagueandUEFAEuropaLeagueinfullhighdefinition.

FanswhomissthelivematchesonFoxFootballChannelandHyppSportsHDcan‘catch-up’onthemviaHyppTV’sexclusiveon-demandchannels,FoxFootballPlusandHyppSportsHDOn-Demand.

Otherpremiumchannelslaunchedin2012includedKidsCo,DiscoveryKids,BBCEntertainment,OutdoorChannelHDandFrance 24 (French news channel). For the Malay audience,HyppTVshowcasedEC Inspirasi (localurbanyouthchannel)andTVAl-Hijrah(locallatestFTAchannelinHD).CateringtoChineseviewers,HyppTVpartneredwithPCCWHongKongtoofferthreenewChinesechannels:nowInternational(varietyand lifestyle),nowMango (varietyand lifestylecontent frommainlandChina)andnowHairun(dramaandseriescontent

frommainlandChina).ForIndians,anewHindimoviechannel,UTVStarsHD,waslaunched.

HyppTVchannelsgrewfrom48linearchannelsin2011to71linear channels in 2012 of which 47 are premium channelsand24freechannels.

Video-on-demand (VOD) HyppTV continued to offer the latest movies and TV serieson-demand from Hollywood and Asian studios. Subscriberswere treated to the Malaysian TV premiere of blockbusterssuch as Puss In Boots 3, The Bourne Legacy, Madagascar3,TheAmazingSpider-Man,Brave,MenInBlack3andTheAvengers. Catering to sports enthusiasts, two subscriptionofferingswerelaunched–HyppExtremeHDandHyppSportsAcademy.On-demandalsocatersforchildrenthroughHyppDinoandHyppAnimasipluslocalandHollywoodseries.TotalVODhoursincreasedto3,000in2012.

Interactive By the end of 2012, Interactive had a total of 19 channelsandapplicationssuchasForecast,FacebookandHyppTVforYouTube.InteractivehasalsobeenapartofHyppTV’sproductdevelopment and marketing initiatives, and served as aplatformforHyppTVPlatinumPacksubscriptionandHyppTVAround the World Contest submission. A new subscriptionchannelwasintroduced,calledB-SmartTVDidik,targetedatpre-schoolersandtoddlers.

Advertising Sales

2012 marked the launch of HyppTV’s advertising business.AsincreasinglymoreconsumersviewcontentonsmartTVs,tablets and other connected devices, agencies are startingtorealisethataconsolidatedapproachtoTVadvertisinganddigitaladvertisingwouldallowthemtostretchtheirmarketingfundsfurtherincreatingbrandawareness,calltoactionanddrivingsales.

Value Added Services TwokeyareasforValueAddedServices(VAS)areLifestyleandChannels. The Lifestyle Portal has been built for the onlinecommunityandderivesrevenueviaadsales,subscriptionandthe e-commerce platform. It also serves as an online salesandservicechannelforuserstosubscribetoTM’sproductsandpaytheirTMbills.


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The Lifestyle Portal comprises: HyppGames, offering 1,010popular massive multiplayer online role-playing games,casualandflashgames;B-Smart,providingenhancedonlinelearningtoolsforUPSR,PMRandSPMstudents;andMUTVOnline, featuring news and interviews, Match HighlightVideos for BPL, Carling Cup, UEFA Champions League andCommunityShield.

TheAbsolutePortal isanonlinemarketingtool forTMwithupdatedcontentforitscustomers.ViaAbsolutePortal,TMisabletoconsolidateallitscustomer-interfacingportals,usingcentralisedusermanagementwithsinglesign-oncapabilitiestogether with online transaction and services. As of end2012,ithadreachedupto24.0millionvisitorsandmorethan500,000members.

Directory and Advertising 2012wasadefiningyearforTMInfo-MediaSdnBhd(TMIM),a wholly-owned subsidiary of TM and the premier directorypublisher of Yellow Pages. In May 2012, the companylaunchedanewYellowPageslogoreplacingthewell-knownwalking finger, to strengthen its product identity reflectingtransformationofthedirectorybusiness.

Aspartoftherebranding,theInternetYellowPages(IYP)wasrevamped to feature more enriched content and to providebetter value and visibility, especially for advertisers. Manymorefeaturesareplanned,suchasamicrosite,mapcapabilityand coupons, to help businesses reach out to consumers.SincetherevampinMay2012monthlyIYPvisitsreachedtheonemillionmarkwith2.5millionpageviews.

OnemajorachievementforTMIMin2012wastheintroductionof the Yellow Pages Malaysia mobile application that iscompatible with IOS, Android, Windows and Blackberrydevices. This application, which contains all the businesslistings,alsohasmapcapabilitiesandinfuturewillhavemorefeaturestoenablebusinessestoconnectwithconsumersonthego.

Printdirectories,themainstayofthecompany,havealsobeengiven much attention. While the Yellow Pages traditionallytargetedtheBusinesstoBusiness(B2B)market,thelaunchof Yellow Pages for Home (YP4H) at end 2011 expandedTM’s reach by targeting the Business to Consumers (B2C)sector. Response from advertisers and users has been veryencouraging and YP4H editions were extended to Penang,JohorBahru,Ipoh,KotaKinabaluandKuchingduringtheyear.

The Malaysia Tourist Pages was renamed Yellow Pages -DestinationMalaysia, insupportof thegovernment’seffortstopromote tourism.DestinationMalaysia is rich incontent,providingnuggetsofinformationabouttravelwithinMalaysia,andisdesignedtosuitthesophisticatedtraveller.

My1ContentMy1Content portal launched its beta in Q1 2011, providingintroductoryfreeaccesstoMalaysiancontentpreneurs.Withfourcontentpillarsonoffer–Video,Application,MusicandGames–contentpreneurswillbeabletoexploreanduploadtheir IP trailers and company information while providingpositive feedback for further improvement during variousengagement sessions, hence the constant change in thedesigncapabilitiesandofferings.

New Media conducted briefings and presentations to theMalaysia Technopreneurs Association and participatedin content related industry events to attract morecontentpreneurs to the initiative. After the first launch,My1Content has a total of 625 content offerings comprising55multi-purposeapplications,126filmsandanimations,46online games and 398 music pieces from local artistes andindependentgroups.

My1Contenthasventuredintomusicandvideostreamingtotakethelocalmusicscenetothenextlevel.Incollaborationwith partners, music videos from My1 Content are aired atcommercialcentres.

PROSPECTS NewMediaisenvisionedtosupportTMGroupinthenew business era where media is fast convergingwith access in addressing customers’ needs. Likethe wave of triple or quadruple play that has beenseeninmorematuremarkets,NewMediahasabigrole increatingdemandformedia-relatedservicesthatarelayeredontopofbroadbandaccess.Coupledwithe-commerceandthedigitalmarketplace,NewMediawillexperiencepromisinggrowthinthenewspace.

New Media strives to offer an extensive range ofservices in any access environment, on any deviceused by the end user, to suit the needs of theConsumerandSMEmarkets.Theaimultimatelyisto offer unrivalled service at home and away fromhomethroughTM’sWiFinetwork.

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faCts at a GlaNCE

increaseofrevenue(RM975.2million) visitorstoMenaraKualaLumpur

16.7 % >13.2 million

‘Excellent’ ranking of Multimedia University forSETARA‘11

Tier-5

OVERVIEWTheSupportBusinessoperationsinTMrangefromeducationand hospitality management to property and facilitymanagement. Support Business continued to monetise itsland banks via the disposal of non-core assets. Meanwhile,improvement initiatives were carried out to upgrade all TMbuildingsandfacilitiestosupporttheGroup’scorebusiness.

FINANCIAL PERFORMANCEFortheyear2012,SupportBusinessincreaseditsrevenuetoRM975.2 million from RM835.8 million in 2011, mainly as aresultofspacerentalscontributedbyPropertyManagement(PM) and higher land revenue contributed by TM FacilitiesSdnBhd(TMF).Accordingly,EBITDAincreased42.6%fromitsfigurein2011.

Operating costs increased marginally to RM1,040.9 millionfromRM953.6millionin2011,duetohigherdirectlandcostsfrom TMF and maintenance costs at PM. These, however,werecushionedbysavingsfromleaselandrental.

There was a slight decrease in capital expenditure fromRM132.8millionin2011toRM127.0million.Ofthis,RM70.3millionwaschannelledtoPMfortheupgradeoffacilitiesinTMbuildingsand installationofgeneratorsets, fire fightingequipmentandairconditioners;RM26.6millionwasallocatedtotheCentralOfficetoreplaceageingvehicles;andRM19.0million went towards the refurbishment of the Melaka andCyberjaya campuses of Multimedia University, renovationof Multimedia College as well as to defray its multimedia,laboratory and book costs and to upgrade Menara KualaLumpurfacilities.

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Support Business

UNIVERSITI TELEKOM SDN BHD/MULTIMEDIA UNIVERSITYAs the first fully-private university in Malaysia, MultimediaUniversity (MMU) is the premier institution in support ofthe ICT and ICT related industries. It strives to be a world-classacademicinstitutioninitschosenfieldsofengineering,communication, information technology, management andmultimedia technology. The year 2012 brought continuedsuccessintheuniversity’smissiontopositionitselfasamajorinternational research institution. Throughout the year, itengaged with students and institutions in the Asia-Pacific,African and European regions in areas of research, inter-institution cooperation, undergraduate and postgraduateeducationaswellascommunityservice.

formspartoftheIndustryExcellenceAwards,andservesasthe government’s official recognition of MMU’s efforts. On2 November, the Malaysian Qualifications Agency (MQA),under the Ministry of Higher Education (MOHE), announcedits2011MalaysianHigherEducationSystemratings (Sistem Penarafan Institusi Pengajian Tinggi Malaysia 2011 – SETARA’11)whereMMUwasrankedasaTier-5‘Excellent’university.No other Malaysian university, public or private, occupies ahigher tier. Inaddition, topuniversities.com listedMMUasatop200Asianuniversityfortheyear.

Under its Academic Quality Assurance initiative, MMUcontinues to focus on the superiority of its academicprogrammessothatstudents,parentsandthepubliccanrestassured that Malaysia will always have at least one sourceof premium quality graduates. The Bachelor of Educationin Teaching English as a Second Language (Honours) wasintroduced in2012,afterbeingapprovedby theMOHE.Thisbrings the total number of MOHE-approved programmes to117,while108programmeshavebeenaccreditedbytheMQA.

Duringtheyear,threeprogrammesinCyberjayawereauditedbytheMQAandonebytheEngineeringAccreditationCouncil(EAC), while at the Melaka campus, the MQA audited fiveprogrammes,andtheEACauditedtwo.

A notable development in MMU is its Cinematic ArtsProgramme (CAP), which will be offered by the Faculty ofCreativeMultimedia.CAPhasbeendesignedanddevelopedincollaborationwiththeUniversityofSouthernCalifornia,andwill be delivered at MMU’s Cyberjaya campus in June 2013,andat the latestpurpose-built campus inEducity Iskandar,Johor,in2014.

MMUalsointroducedanewfacultyon28June,theGraduateSchoolofManagement(GSM).FormerlyundertheFacultyofManagement, GSM will focus on developing and deliveringpostgraduate courses in business, management andadministration. The establishment of GSM is expected tocontributetoMalaysia’slong-termbusinessmanagementandentrepreneuriallandscape.

2012 was a challenging yet productive year for UniteleMultimediaSdnBhd(MMUCnergy),MMU’scommercialisationarm. During the year, MMU Cnergy signed 12 agreementswithMalaysiancompanies,launchedthreecommercialisationprojects,andcompleted12existingprojects.Also,10notableprojectswereheldthroughout2012,withaclienteleincluding

MMU graduates, renowned for their quality, consistentlyachievehighemploymentrateswithintheindustry.Intheyearunderreview,MMUproducedatotalof552Diplomagraduates,2,750 Bachelor’s graduates, 241 Master’s graduates and 34PhDgraduates.Postgraduatestudentenrolmenttotalled272.MMUregisteredatotalstudentpopulationof19,131in2012,ascompared to20,179 in thepreviousyear.Of itsstudents,16,364 were local and 2,767 international, representing 77countries.

On 24 October, MMU was awarded the prestigious ExportExcellence Award 2011 by the Ministry of InternationalTrade and Industry (MITI). The Export Excellence Award

MMU’s Chancellery Building in Cyberjaya.


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HoChiMinhUniversity(Vietnam),ShellNigeria,theNationalUniversity of Changwon (Korea), Kuwait Finance House,MinistryofForeignAffairs,BasicHumanNeedsofJapan,andMalaysiaAirportHoldingsBerhad.

MMU Cnergy secured revenue of RM5.6 million throughtraining, short courses, commercialisation of products andservices,consultancyandacademiclicensing.

MMU continues to grow in terms of R&D capacity andcapabilities.WhentheSETARA`11resultswereannounced,MOHE also released the results of the Malaysian ResearchAssessment(MyRA)instrumentfor2011,inwhichMMUwasawardedthreestars.Inaddition,MMUreceivedanumberofnotablegrantsduringtheyear,includingonefromHuawei,theleading global information and communications technology(ICT)solutionsproviderinChina.Underthisgrant,aHuaweiUniversityTrainingLabwillbeestablishedonMMU’scampus,andHuaweiwillsupplytheequipmenttobeusedbystaffandstudentstoresearchandexperimentwithnext-generationICTtechnologiessuchascloudcomputing,theLTEcommunicationstandardsandfixedbroadband,amongothers.

Financially,MMUcontinuestobeaself-sustaineduniversity,generating internal funds to support its operational andcapitalexpenses.

MMU’s subsidiary, Multimedia College Sdn Bhd (MMC),extends TM’s academic reach to offer quality education tothose with limited qualifications. MMC comprises a maincampus in Kuala Lumpur and regional colleges in Perak,Terengganu,SabahandSarawakwhichtogetherhaveatotalstudentpopulationof1,806.ThecollegeofferseightDiplomaprogrammesaccreditedbytheMQA.

Thisyear,theTerengganuCollegewillofferanewphotographycourseundertheMalaysianSkillsCertificateincollaborationwiththeDepartmentofSkillsDevelopment.Meanwhile,SabahCollegehasmoveditscampustoAlamesraPlazaPermai,KotaKinabalu.Thenewcampuscanaccommodate350studentsascomparedto150attheoldcampusinKaramunsing.

Meanwhile, the Malaysian Communications and MultimediaCommission (MCMC) awarded MMU the MCMC Grant forInnovative & Creative Contents & Applications (MaGICCA).WorthRM1million,thisistobechannelledtoundergraduateand postgraduate students to develop content with highpotentialforcommercialisation.

MMU’s laboratories aim to prepare students for working life.

MMU students enjoy one of the most conducive learning environment.

Hands-on training is a must for MMC’s students.

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MENARA KUALA LUMPUR SDN BHD Menara Kuala Lumpur (MKL), straddling the peak of BukitNanas at 421 metres above ground, is the seventh tallesttelecommunications tower in the world and the tallest inSoutheastAsia.Thetowerwasofficiallyopenedtothepublicin1996,and isamemberofTheWorldFederationofGreatTowers(WFGT),comprising32distinguishedtowers.BlendingseamlesslywithlushtropicalgreeneryintheheartofKualaLumpur, MKL is a prominent national icon symbolisingMalaysia as a renowned tourist destination as well as atechnologicallyadvancedcountry.

Besidesitstoweringpresence,MKLisalsoknownforsignatureevents such as the 1Malaysia Kuala Lumpur HeritageXplorace, KL Tower International Towerthon Challenge, KLTower International BASE Jump, Explorasi Warisan and thePestaNegeri(StateFestival).

MenaraKualaLumpurSdnBhd(MKLSB)managesthetoweraswellasMenaraAlorSetar(MAS)andMuziumTelekom.ThecompanyhasshownexcellenceinmarketingthetowersandmuseumandinacquiringtheISO9001:2008certification.Asstrategic positioning, MKLSB is a member of the MalaysianAssociation of Tour and Travel Agents (MATTA), MalaysianAssociationofHotels(MAH)andotherrelevantorganisations.

It is MKLSB’s vision to turn MKL into a leading tourismdestination in Southeast Asia. Since its official opening,MKL has attracted more than 13.2 million visitors, mainlyfrom India, China, Australia, Japan, Indonesia and Europeother than Malaysia. MKL offers excitement and adventurewith various attractions and facilities including Atmosphere360°, a revolving restaurant offering a breath-taking viewof the Kuala Lumpur skyline. Other attractions include theMegaviewBanquetHalls,ObservationDeck,souvenirshops,F1RacingSimulator,AnimalZone,PonyRide,XDTheatreandthe1MalaysiaCulturalVillage.

Over the years, MKL has claimed several awards fromprestigious bodies and organisations. Its most recentwins include the Special Award and being a finalist for theCompanyofTheYearattheTMGroupAwards2012;andtheKualaLumpurMayor’sAwardforOutstandingAchievementinTouristAttraction2011/2013.

Being nominated as the best subsidiary in the TM Group in2011spurredMKLSBtostriveevenharderin2012,asaresultof which it increased its domestic visitorship by 16.0%. Thecompany’s EBITDA inched up from RM12.8 million in 2011to RM14.7 million, while continuous efforts at efficient costmanagementpaidoffwithaprofitaftertaxofRM13.5million,ascomparedtoRM12.0millionin2011.

MKListargetinga3.0%increaseinvisitors in2013throughadvertising, and branding the tower as a destination forCulture, Adventure and Nature along with an exciting arrayofnewandinnovativeproductsandpackages.ThelaunchofattractionsliketheBlueCoralAquariuminDecember2012,therevampofMuziumTelekomExhibitionGalleryinthefirstquarter of 2013 and reopening of the Bukit Nanas JungleWalk in late 2013 are also expected to draw in the crowds.Severalnewpackageshavebeenintroducedtofurtherboostvisitorship, such as the School Holiday package, Weddingin the Sky package, Up Close & Personal with Celebrities,CorporateRamadanpackage,CorporateAidilfitripackage,and

KL Tower International BASE Jump participants in action.

Menara Kuala Lumpur (MKL). Menara Alor Setar (MAS).


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InternationalCulturalFestivals.ContinuoussupportfromtheMinistryofTourism,KualaLumpurCityHallandkeyindustryplayers,coupledwiththededicationofTMManagementandemployees,willcontributetowardsasuccessful2013.

MKLisalsoactivelyinvolvedinCorporateResponsibility(CR)initiatives which included a ‘Bubur Lambuk’ competitionorganised during Ramadan, to which children from severalorphanagesaroundtheKlangValleywereinvited.Meanwhile,a Kuliyyah Fissama series featuring well-known speakerswas organised in conjunction with Awal Muharram, andattracted more than 200 participants. Proceeds from ticketsalesweredonatedtocharityhomesintheKlangValley.MKLalso supported World Diabetes Awareness Day by lightingthetowerinblueontheeveof14November.In2013,MKLSBwill explore new CR initiatives in collaboration with non-governmentalorganisationsandnationalwelfarebodies.

Muzium Telekom’s community outreach programme has todateinvolvedmorethan300schools,whileMenaraAlorSetarisplanningtocollaboratewith150schoolsinitsownoutreachprogrammein2013.

MenaraAlorSetar istheworld’s22ndtallesttowerat165.5metres above sea level. Being a national icon, Menara AlorSetarattractedabout400,000visitorsin2012–bothlocalandtourists from Thailand, Indonesia and Singapore. The towerhostedvariouseventswhichprovedpopularwiththecrowds,suchasNewYear’sEvecelebrations,an internationalMuayThai competition, Chap Goh Mei Festival, ‘Pekan Nat PanduPuteri’ Carnival, ‘Ayam Serama’ International Competition,international lion dance competition, MARA carnival, ‘JomPi Menara Alor Setar’ carnival, Merdeka Day celebrationsanda ‘BazarRakyat’. Italsoservedasavenue forweddingreceptions.

Tofurtherenhanceitstouristicpotential,MenaraAlorSetarembarked on a major beautification/renovation programmewhich saw it install a new ticketing counter equipped withelectronic ticketingserviceaswellas informationboardsattheobservationdeck.Italsoupgradedthelandscapeandminibird park, the lighting (building lamps and tree lamps) andrenovatedthewashroomsandVIPlounge.

TMF AUTOLEASE SDN BHDTMF Autolease Sdn Bhd (TMFA) manages the fleet of TMGroup’svehiclesnationwide,ensuringtheyareroadworthy(incompliance with government regulations), utilised optimally

and available at all times for business operations. As at 31December 2012, the fleet stood at 4,992 vehicles, most ofwhichwereutilityvehiclessuchasvansandfour-wheeldrives(4WDs).Besides itsfleet,TMFAmanagessevenzoneofficesand27serviceoutletsnationwidetoserveTM.TMFA’sbiggestcustomers over the years have been Network DevelopmentandRegionalNetworkOperationwhichtogetherlease3,806vehicles,or82.7%ofthetotal.

For the financial year ended 31 December 2012, TMFAregisteredrevenueofRM50.4millionwithoperatingcostsofRM35.3millionandprofitaftertaxofRM12.3million.Mostoftherevenue (77.5%)wasderived fromtheManagementandMaintenancePackage(MMP)feeforTMvehicles.

AspartofTM’sPerformanceImprovementProgramme(PIP)3.0,TMFA in2012continued implementing its vehicle right-sizing programme to ensure all Group vehicles are usedeffectivelyandefficiently.Thisledtoanadditional11vehiclesbeingdeployedtootherusers,andthedisposalof349vehiclesthat had exceeded their useful lives, generating revenue ofRM6.7 million. At the same time, 236 4WDs and vans wererefurbished to extend their life spans, saving the GroupRM15.0millionincapitaloutlayfornewvehiclesforatleasttwoyears.TherefurbishmenthelpedeasesomeofthecapitalexpenditureofRM22.6millionwhichwenttowardsreplacing364 ageing vehicles. Most of the new vehicles (89.3%) havebeen assigned to support the UniFi programme. TMFA alsoprovided12customisedminiTM-on-WheelstoTMConsumeratacostofRM2.1million.

TMFA managed to carry out service maintenance on 3,037vehicles at customer premises through its mobile team,saving the Group RM0.8 million. It also obtained a discountamounting to RM1.1 million for the purchase of vehiclesduringtheyear.

In2012,TMFAran79qualityprogrammesfor itscustomersincluding30safeanddefensivedrivingcourses (Pemanduan Berhemah), 12 programmes on proper driving with 4WDs,six coursesonGoodsDrivingLicence (GDL) for commercialvehiclesaswellas31technicalvehicleclinics.Itscored89.0%in a Customer Satisfaction Index (CSI) based on a surveycompletedinDecember2012.

Internally, TMFA achieved 98.5% vehicle availability forcustomers, 99.4% vehicle service achievement and 86.4%compliancewithTMFAprocessesandprocedures,allbearingtestimonytoitscustomer-centricculture.

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Support Business

In2013,TMFAwillcontinuetosupporttheTMGroupaspirationsinthePIP3.0journeybymanagingandoptimisingitsoperatingcosts.Stakeholderscanrestassuredoffurtherimprovementsinperformanceandpositivegrowth inshareholdervalueasTMFAcontinuestoprovidebetterservicetotheGroup.

PROPERTY MANAGEMENTProperty Management (PM) acts as TM’s in-house land andproperty adviser. PM contributes to TM’s performance byunlockingitsidlelandandrentingofficespacetobothinternaland external tenants. To date, it has unlocked over 3,085.3acresofland,ofwhich929.2acresweredisposedofandtherestwereunderjointdevelopmentarrangement.

PMisalsoresponsibleforthepropertyandlandadministrationof all TM’s real assets. Apart from creating value from theidlelandbank,PMstudiescost-savingoptions,especially inutilitiesconsumptionandpropertytaxes.

For the financial year ended 2012, PM managed torecognise a gain of RM41.4 million, contributed by propertycommercialisation which included the disposal of non-corelandbanksandjointlanddevelopmentactivities.Inaddition,itmanagedtosaveRM8.5millionoflandleaserentalovertheyear. Most of the major projects undertaken by PM in 2012wereon-goingfrompreviousyears.

TM Convention Centre (TMCC), one of major projectsundertakenbyPMwhichwascompleted inDecember2011,was officially launched by the Prime Minister of Malaysia,Dato’SriMohdNajibBinTunAbdulRazakon21June2012.AmongtheinauguraleventshostedatTMCCin2012werethe27thTMAnnualGeneralMeetingandTMEntrepreneurAwardNightofficiatedbyformerPrimeMinisterofMalaysia,TunDrMahathirMohamad.

PROPERTY OPERATIONSTheyear2012sawPropertyOperations (PO),TM’s in-housespecialistforthemaintenanceofnetworkbuildings,overcomethe challenge of network breakdowns due to power-relatedissues(PRI).ThenumberofPRIfaultsreducedbyasignificant35.0%from106in2011,resultinginbetternetworkreliabilityand better customer experience. This would not have beenpossible if not for the Mechanical and Electrical (M&E)Equipment Replacement Programme carried out by PO

Official launching of TM Convention Centre by Prime Minister of Malaysia, YAB Dato’ Sri Mohd Najib Tun Razak on 21 June 2012.

throughout the year involving the replacement of ageingair-conditioning and fire protection systems, generatorsets, batteries and rectifiers. In total, the M&E EquipmentReplacementProgrammeincurredacostofRM90million.

On routine maintenance, in 2012 PO changed its approachby engaging specialists as its strategic partners both forhousekeepingandM&Emaintenance.Withthat,POmanagedtoachieveMCMC’stargetofaminimumup-timeof99.9999%for the Alternating Current (AC), Direct Current (DC) andair-conditioning systems. To further ensure competent andqualityservice,POsent30staffforaChargemancoursewhile90 others attended advanced training on M&E maintenanceconductedbyInstitutKerjaRayaMalaysia(IKRAM)andInstitutLatihanSultanAhmadShah(ILSAS).

PO also supports TM in its green agenda. Another threebuildings were EMS ISO 14001 certified by SIRIM in 2012besides Menara TM, which received its certification in2004. They were TM Complex/IDC Cyberjaya, TM Alor SetarComplex/exchange and TM Bukit Timbalan exchange. Theenvironmental aspects monitored were solid and scheduledwastegeneration,andwaterandelectricityusage,allofwhichwere kept either at a minimum or at least 3.0% lower thanthe2011figures.RM1.5millioninenergysavingswasderivedfromadjustingtheroomtemperatureatselectedcabinsandroomswithinTMbuildings.

In2012,POregisteredanoperatingrevenueandoperatingcostofRM120.4millionandRM126.6millionrespectively.Movingforward,PO iscommittedto further improving itsservice toTMthroughemployeecompetency-building,greeninitiativesandinnovation.


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Perfect for events and meetings, TM Convention Centre (TMCC) provides comprehensive facilities.

SECURITY MANAGEMENT

ThecorebusinessofSecurityManagement(SM)istoprovidereliable and effective security services to safeguard TM’sassetsandpersonnelandtominimiseanydisruptionorlosstobusinessoperations.Itsmainfunctionscoverthefollowing:

• ProvisionofaSecuredWorkplace• SecurityofEmployees• AssetProtection• LossandCrimePrevention• SecurityConsultancy• TM representation on the National Crisis Management

Committee

SM maintained a Customer Satisfaction Index of 87.5% andSecurity Service Availability Index (SSAI) of 98.2% in 2012.Movingforward,itisexpectedthatwiththere-organisationoftheunitfromastatetoregionalbase,theabilitytostreamlinealloperationalmattersandmonitorvendorperformancewillbefurtherenhanced.

FullyawareofTM’sresponsibilitytoprotectitsassetsandinline with the Government’s initiative to reduce crime in thecountrythroughtheNationalKeyResultArea(NKRA)underthe Ministry of Home Affairs, TM has taken another stepaheadtosupportthisbyaconsolidationofeffortsthroughoutthecountrytopreventcabletheft.Jeopardisingthenationalsecurity,aswellasdefyingtherightsfortheRakyattobenefitfrom telecommunication facilities, cable theft is a seriouscrime that might bring severe consequences not to onlycertainparties,butitcouldaffectthesovereigntyofthenation.

Anationwidecampaignwas launched in the firstquarterof2012toincreasetheawarenessofpreventingcabletheft,notonlybyTMandtheenforcementagencies,butalsobygettingthecooperationfromthepublicaswell.TMhasproducedasetofpublicserviceadvertisementsandannouncementsaspart of the campaign, which complemented the on-groundactivities being conducted by the state offices and SM. Anofficialpledgetoseriouslyfightcabletheftwasforgedon19October 2012, where TM reiterates its commitment to worktogether with PDRM and all the enforcement agencies andorganisations to shoulder the responsibilities to put a stopto these irresponsible actions in the ‘Majlis Penghargaan Pencegahan Kecurian Kabel’thatwasheldtoappreciatethoselendingahandinhelpingTMtorealisethecollaborationsinfightingcabletheft.

Asaresultof theawarenesscampaign, thenumbersspeakforthemselveswhenSMreducedthenumberofcabletheftsto10,209 in2012 from11,539 in2011.Throughout theyear,110criminalswerearrestedbyPolisDirajaMalaysia(PDRM)forstealingTMcables.SMhadestablishedclosejointcrimeprevention operation on the ground with PDRM, PasukanSukarelawanMalaysia(RELA),SkimRondaanSukarela(SRS)and Jawatankuasa Kemajuan & Keselamatan Kampung(JKKK). The regular coordination meetings were organizedbyTMandPDRM.Theincreasedawarenessofthepubliconcable thefts by reporting any sighting of suspicious activityonTMcableshadcontributedtothesuccessfularrests.Theutilisationofi-WatchalarmsandResponseTeamsprovedtobeveryeffectivetodetectandarrestthecriminalsintime.

The public also assisted TM and PDRM by conducting nightpatrolling at their areas or report immediately on sightingof any suspicious activity. SM also participated in severalactivitiessuchasTMsalespromotionandsecurityawarenesscampaign organised by PDRM/TM by giving talks anddistributing cable theft prevention leaflets. 57 programmeswere conducted nationwide throughout the year. SM willcontinuetoseekhelpfromvariousgovernmentenforcementagencies and will come up with new initiatives to furthermitigatesuchthefts.

SM will continue to enhance its efficacy to protect TM’sbusinesscontinuityatalltimes.

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iT&nTPOWeRinGTM’SCUSTOMeR eXPeRienCe


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million broadband customers

OVERVIEWITandNetworkTechnology(IT&NT)representsTM’ssystemand technical arms. It is responsible for planning, building,delivering, operating and maintaining telecommunicationsinfrastructure to support the Company’s current and futurebusiness needs. It provides the infrastructure and systemstomanageTM’smore than4.3million telephonycustomersandover2.0millionbroadbandconnectionsinacountrywithabout6.5millionhouseholds.

Since2010,IT&NThasbeensupportingTM’sambitiousHighSpeedBroadband(HSBB)projectbydevelopingthenecessaryinfrastructureandmigratingtheCompany’snetworkontoanall-IPNextGenerationNetwork(NGN).WiththeNGN,TMisbetter able to serve its customers not only with augmentedbandwidth,buthasthepotentialtomeetfutureneedsatloweroperational costs and enhanced service potential. Based onanIPMultimediaService(IMS),theNGNdeliversanenhancedandintegrateddigitallifestyletoallMalaysianswhileopeningup possibilities through connection, communication andcollaboration.

HSBB has proven to be a vehicle for a nationwide upswingin GDP, lifestyle and workstyle for Malaysians. The greenfiberisedHSBBisakeynational infrastructureinitiativethatis crucial to helping Malaysia leapfrog into the knowledgeeconomy.Itsimpactcanbeseenonthreefronts,namelythenation, people and industry. From the time it was launchedin March 2010 till January 2013, TM’s HSBB service,branded UniFi, has attracted more than 500,000 customers,achievinga take-uprateof35.0%outof themore than1.37millionpremisespassed.UniFicoverageareashadexpandedfrom 78 exchange areas in December 2011 to 96 exchangeareasinDecember2012.

Atthesametime,asStreamyxcontinuestobethemainstreambroadbandchoice,IT&NThasnotletuponeffortstoenhancethebrowsingexperienceofcustomersonthisservice.

faCts at a GlaNCE

ofwhom500,000areonfibre fibrecableslaid

passed,surpassingPPPtarget

>2.0 >450,000km

>1.3 million HsBB premises

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IT&NT Powering TM’sCustomer Experience

AchallengefacingIT&NTistomaintainqualityinthefaceofdemandforoffshorecontent,mainlyfromtheUSandChina.TM is observing explosive traffic growth, especially fromvideo, and increasing concurrent sessions and traffic. Tosustainapositivecustomerexperience,TMhasstrengtheneditspositionasthestrategicregionalhubbymakingavailablesufficient quality global connectivity, while bringinginternational content to Malaysia through agreements withcontentproviderssuchasGoogle,Yahoo!andAkamai.

PERFORMANCE Migration to NGN allows TM to consolidate the number ofexchangesbymorethan20.0%,from689sitestoabout533sites. As of end 2012, 32.0% of the exchanges have beenmigratedtoNGN,servingatotalof870,000customers.Withthis,TMhasseenareductioninfaultratesandbetterlevelofsparesinventory.SeveralnewserviceshavebeenintroducedviaNGNsuchasVoice-Over-Broadband, IPCentrexandSIPTrunking.Toattractnewcustomersandretainexistingones,moreserviceswillbeintroducedonthenewplatformmakingit easier to make video calls, multimedia conferencing,convergenceconferencingandunifiedcommunications(UC).

To power HSBB, IT&NT is supplementing the new NGNcore with over 500 Metro Ethernet nodes and almost 100routersforthedomesticIPcore.Ithasalsotransformeditssystems by implementing a brand-new operation supportsystem/businesssupportsystem(OSS/BSS)suitewithinninemonths. This was accomplished without any major glitchesorproblems,andexistingproductsarebeingaddedontothesystem. The OSS/BSS migration was a greenfield approachusingavendor-exclusivesolutionbasedonasingleplatform,and minimised customisation as much as possible. IT&NTlookedat theHSBBandhigh-growth IPproductsfirst,ring-fencedthem,andstartedmigrationforlegacyproductsonlywhentheplatformreachedstability.

In the process of this transformation, IT&NT has collapsed700systemstolessthan300,whichwilleventuallybefurthercollapsedtojust70.BroadbandForumandITUstandardshavebeenemployedasmuchaspossibletoavertmajorproblems,especially on the OSS/BSS side where a multi-vendorenvironmentexistsforallplatforms.Aparallelmigrationfortheaccess,coreandITsystemhasneverbeendoneonthisscalebefore.

The network has received Metro Ethernet Forum (MEF)certification, the second to be awarded to any telco inSoutheast Asia. This serves as recognition of the quality ofTM’s Metro Ethernet infrastructure, which supports all ourservices.Todate,morethanatotalof450,000kmfibrecableshavebeenlaid.

ThemostsatisfyingresultofthisnetworkandITtransformationhas been an increase in customer satisfaction. In 2012, TMmaintainedascoreofover72.0intheTRI*Mindex,whichishigherthantheglobalaverageof68.0.TowardsimprovingthequalityofStreamyx,extensiveaccessnetwork rehabilitationworks were carried out on the copper and fibre cabinets,overheadcablesanddropwires.IT&NTalsocollaboratedwiththelocalcommunitytomitigatecabletheft,henceminimisingservicedisruption.

STRATEGYDespite having a multi-vendor strategy, IT&NT decidedto reduce the complexity of its all-IP transformations byanchoring itsactivities to justa fewstrategicpartners.Thishas helped manage the complexity of network deployment.Theeconomicsofmigrationwerealsoanalysedcarefullyassomeresultswerequitecounterintuitive.Forexample,IT&NThasdecidedtocontinuetousecertainlegacyplatformsduetoitslowfaultrate,highperformanceandlowmigrationcost.

At the same time, IT&NT has transformed TM’s technologybasebyintroducinganew,muchsimplerarchitecturebasedon service delivery platforms such as IMS to enable TMto go to market with new services in a shorter timeframe.SelectionofthemostappropriatetechnologytosupportTM’sbusinessneeds,thesimplifiedNGNnetworkarchitectureandoperationalactivitieshavepavedthewaytowardsanefficientand cost-effective handling of bandwidth growth movingforward.

ForHSBBdeployment,atechnologyauditbyoneoftheleadingfixed-lineoperatorsinEuropeconcludedthat“TM’schoiceofarchitecture… made it one of the fastest and most CAPEX-efficientHSBBdeploymentsintheworld”.

Toensureitsemployeeshavetherightskillsandknowledgetomanagethenewservices,TMhasplacedmuchemphasisontrainingontheprovisioning,operationandmaintenanceofthenewnetwork.


194



KEY INITIATIVE: TM’S E-CUBE (E3) INFRA – EFFICIENT, EFFECTIVE, ELASTICTM’s E3 infrastructure is the outcome of strategic, carefuland optimum network and IT convergence and migration.E3 is based on the simple principles of open standards andinteroperability,simplificationofarchitectureandoperationalactivities, smart network and hardened security. The flowthroughfromfulfillmenttoassuranceandbillingisextendedfrom mass market products to IPVPN and enterprise andgovernmentproducts,whilecarriers’servicesareenabledwithincreasedvisibilityof thenetworkandserviceperformance.Thesystemcapabilitieswereupgradedtoallowforservicebillrating,tosupportthenewbusinessrequirementsforexamplebillingbyevent,realtimemeasureoftraffic,etc.

Asaresult,TM’sE3infrastructureisefficientbybeingmodularandscalable,withlowercosttoserve.Itiseffectivebymeansofbeingsecure, IPv6-compliant,standard-basedandgreen.Theinfrastructureiselasticasitismodular,optimisesusageofcloudtechnologies,leveragesonout-of-the-boxsolutionsandarchitecturallysimple.

Theinfrastructureisalsoafull-IP,state-of-the-artnetwork,which supports quality and class of service (QoS/CoS) andimproves cost efficiencies. During the roll out of HSBBinfrastructure, TM’s capex hit a high of 30.0% of revenue.Today, thebenefitsof this infrastructurearebeingreflectedinalowercapexthatiswellwithintheteens,withthecostperlinedecreasingbyabout25.0%.

FUTURE PLANSOverall, TM is optimistic of the future of the Malaysiantelecommunications sector, driven by broadband. IT&NTwill continue to support TM in providing optimal technologysolutionstomeetfuturebusinessrequirements.

The overall migration of PSTN exchanges will continue andis expected to be completed by 2015. For year 2013, TMplanstocompleteabout60.0%ofthemigration.Meanwhile,TM’s Transmission and Access network is also undergoingmigration. Legacy access network elements are beingreplacedwithIPnetworkelements,whiletransmissionlinksthatrideonthelegacynetworkarebeingmigratedtotheIPnetwork.Withthemigrationtoanall-IPnetwork,customerswillhavebetterserviceexperienceandquality.

Intermsofservicedelivery,IT&NThascontinuouslyimprovedandupgradedoursystemsforproductsandservicestobettermanage end-to-end fulfillment and assurance processes.Theon-goingITtransformationhastranslatedintoimprovedbusinessdeliverableswiththe focusofenhancingcustomerexperience. IT&NT will continue to prioritise operationalexcellencetoserveTM’sbusinessthroughthedeliveryofbestinclassapplicationsandinfrastructure.

195



Box Article

Intoday’scrowdedandcompetitivemarketplace,businessesrelyheavilyoninformationandcommunicationstechnologies(ICT) to facilitate their processes and operations. They also depend on IT systems and services to access, share andstore data. ICT creates greater efficiencies while lowering costs and generally allowing companies to better connect,communicateandcollaborate.

Asthecountrystrivestomoveupthevaluechainbyattaininghigh-incomestatus,thefulldevelopmentanddeploymentofICTiscritical.Thegovernment’sappreciationofthefactledtotheambitiousHighSpeedBroadband(HSBB)project,ofwhichTMistheprimarydriverunderaPublicPrivatePartnership(PPP)agreement.HSBBisessentialfortheprovisionofservicesatthespeedrequiredbytoday’scorporations.

Inordertoenableafullydigitalisedenvironment,TMhasbeenupgradingitsnetwork,systemsandservices.Coretothistransformation is migrating its legacy PSTN network into an all-IP New Generation Network (NGN) for more efficientinternalconnectivity.WiththeNGN,TMisabletoofferawholesuiteofservicestofurtherservetheneedsofitsbusinesscustomers.

Professional & Architecture Services

Infrastructure Services

VADS Data Center (Tier II to IV)

TM Connectivitiy (HSBB, Internet, MPLS, Voice & Data)

IT Services (ITS)

Hosting-C

ore,M

anaged & Value

Managed Server

& Storage

Managed D

esktop

Public C

loud (IaaS)

Managed N

etwork

Visibility

Managed TP

Managed U

C

Managed Security

Managed W

AN

Managed LA

N

Value Added Services (VAS)

BP

O Services (C

ontact Center, K

nowledge

Proc, etc)

PM

O Services

TM’S e3 inFRa:DRiVinG iCT aDOPTiOn FOR RaPiD BUSineSS GROWTh

Its services are tailored tomeet the specific needs ofdifferent industries, from retailto manufacturing, and logisticsto IT. The services range fromconnectivity (e.g. leased lines)to managed services (e.g. VPNandMetro-E)encompassingalsoIT and value based managedservices such as ICT andbusiness process outsourcing(BPO). Demand for ICT/BPO,in particular, has increasedsignificantly over the past fewyears.TMisabletocatertothisdemand with its E3 Infra, whichsupports the Company in thelatestphaseofitstransformationjourney.


196



TM’S E3 INFRA – EFFICIENT, EFFECTIVE, ELASTICTM’sE3Infraissmart,agile,flexibleandsecured.Itisefficientbybeingmodular,scalableandmorecost-effective.Itiseffectivebymeansofbeingsecured,IPv6-compliant,standard-basedandgreen.Finally,theinfrastructureiselasticasitoptimisescloudtechnologiesandisarchitecturallysimple,providingincreasedvisibilityofthenetworkanditsserviceperformance.

E3 InfrasupportsTM’sambition tobeaone-stopcentresatisfyingall theneedsof corporateclientsbypowering fourimportantleversthatcontributetothesuccessofabusiness:bandwidth,ICT&IP,performance&reliabilityandcloudcomputing.

BandwidthNetworkspeedandqualityareprovendriversof competitiveness,andhavebeenshown todirectly impactacountry’sGDP.ThegreenfiberisedHSBBisakeynationalinfrastructureinitiativethatiscrucialtohelpingMalaysialeapfrogintotheknowledgeeconomy.Itsimpactcanbeseenonthreefronts,namelythenation,peopleandindustry.UniFiVIP20isequivalenttotheaveragebroadbandspeedinSouthKorea.Asof2012,UniFicoverageareashadexpandedto96exchangeareas.

TMalsoofferswholesaleservicesintheformofHighSpeedBroadbandAccess(HSBA),HighSpeedBroadbandTransmission(HSBT)andHighSpeedBroadbandConnection(HSBC)tootherserviceproviders.

• HSBB(Transmission)isofferedtoserviceprovidersthathavehighbackhaulcapacityandbandwidthrequirementstosupporttheirvideoanddatatransportservices.

• HSBB(Access)caterstoserviceprovidersthatofferbandwidthhungryIP-basedvalueaddedservicessuchashigh-speed Internet access, video-on-demand, online gaming, high definition TV, tele-presence, e-Health, IPTV andinteractiveentertainment.

• HSBB (Connection) enables interconnection between TM’s HSBB network and other service providers’ IP-basednetworks.ThisallowsenduserstoenjoymultimediaconnectivityacrossdifferentIP-basednetworks.

Withtheaboveofferings,serviceprovidersandotherbusinessentitiesorbroadcastingcompaniesmayshareoruseTM’sfixedlinehigh-speedbroadbandinfrastructurewithouthavingtobuildtheirown.

• Over 480,000 customers through out Malaysia

Schematicof the network

Keyhighlightsfor HSBB

• 1.3 million ports• 1.3+ million premises passed• 3.0 million DSL ports

• 500+ Regional Ethernet nodes• 90+ domestic and 30+ international ultra fast core nodes

ADSLFTTH

VDSL2

IPCore

IMS

Backbone

• Integrated IT Systems• Data centre infrastructure

OSS/BSS

DataCentres

Customers Access CoreCloud

197



Box Article

ICT & IPBusinesses benefit from ICT & IP by having smarter and simplified networks with added capabilities and ease ofmanagementwhichhelptoreduceoperationalaswellascapitalexpenditure.ICT&IPfurtherofferstheoptionsofpayperuse,scalability,Bring-Your-Own-Device(BYOD)operatingmodel,multi-screenandmulti-devicecapabilitiesandtheflexibility to support mobility and new applications.Examples of such services are IP contact centres, remote IP-PBX,unifiedcommunications,automaticbackup/disasterrecovery,integratedcollaborationtools,ConvergentIPCentrexandSIPTrunking.

SinceTM’sNGNhasbeenreadyin2011,majorgovernmentagenciesandkeyenterprisecustomershavemigratedontotheIPv6-readyplatform.WithanIPv6-readynetwork,TMiswellplacedtosupportfutureIPv6requirementsinareassuchascorporate Internet,broadbandservices,hostedservicesandapplications. IPv6 transitionbringsmoreopportunitiesbeyondbusinesssustainability.Withamultitudeofmachine-to-machine(M2M)applicationsexpectedtocomeinabigway,therewillbemanymoreconnecteddevicesandapplicationsthatcouldtransformnotonlytheInternetexperiencebutalsolifestyles.CustomerswillbenefitfromthericherservicesenabledbyIPv6,orevenacombinationofIPv4/IPv6addresses.

PERFORMANCE & RELIABILITYReliabilityofproductsandservicesiskeytoanybusinesses.Inenablingitsbusinesscustomerstogrow,TMassuresahighlevelofitsproductandservicereliability.

TM’stimetoserveforbroadbandfulfillmentandassuranceisinthetop25.0%quartileagainsttheinternationaloperationalbenchmark.Itsstrongworkforcenationwideisabletointervenequickly,ensuringtheextensivenetworkisalwayssecured,stableandreliable.TheGroup’sstate-of-the-artoperationsandbusinesssupportsystemsallowittoprovideprofessionalandefficientcustomerservice.TM,moreover,isconstantlyimprovingitsproductandservicereliabilityasanassuranceofeverbettercustomerexperience.

CLOUDCloudservicesareofferedincollaborationwithVADSBerhad(VADS).Cloudcomputingisapoolofmanaged,highlyscalableinfrastructurecapableofhostingendcustomerapplicationsandinfrastructure.

Itlinksbusinesses,customersanduserstogetherviaavirtualdatacentre,offeringresources,computingpower,networkinfrastructure,platform,operationandmanagementonasharedvirtualplatform.Cloudcomputingisacatalysttogreencomputingsinceitsarchitecturehastheabilitytoscaletosuituser’sdemand.BusinessesthatsubscribetocloudserviceswillthereforenotonlysaveontheirCapexandOpexbutwillalsocontributetolowerCO2emissions,nomatterwhattheirsize,astheywouldsaveonspace,manpowerandenergytoruntheirownserversandcoolingsystems.

AstudydonebyaworldleadingconsultantfoundthatSmallandMediumEnterprises(SMEs)canreduceupto50.0%oftheirCPUcostpermonthusingpubliccloudinfrastructureasopposedtotheirowninfrastructure.


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DevelopmentModels

Private Virtualprivate Public Hybrid

ServiceModels

Infrastructure as aService (IaaS)

Platform as a Service (PaaS)

Software as aService (PaaS)

EssentialCharacteristics On-Demand

SelfService

Measured Service Rapid Elasticly

Broad NetworkAccess

ResourcePooling

Withthisinmind,lastyearTMlaunchedtheTMBizAppStore,aself-serviceportalwhichservesasaSoftware-as-a-Service(SaaS)marketplaceforcloud-basedapplicationsandsoftware.TMBizAppStoreofferscloud-basedbusinessapplicationsandsolutionsspeciallycateredforSMEs.ThisaddstoTM’sexistingportfolioofproductsandservicestailoredfortheSMEsegment,includingUniFiforbusiness,OfficeinaBox™,SmartMap,IPVPN,DOMEandVSAT.

ToensurethattheTMBizAppStorereachesitstruepotential,VADShassetuptheVADSCloudEnablementProgrammeenablinglocalindependentsoftwarevendors(ISVs)topromotetheirapplicationsasSaaSandtoencouragegreateradoptionof ICT, especially among SMEs. The VADS Cloud Enablement Programme consists of tools, platforms, best practices,businessandtechnicalworkshops/trainingandmarketingprogrammestoassistISVstoenabletheirapplicationsasSaaS.

VADSforeseesmorepartnershipswithkeyindustryplayers,technologypartnersandISVsinthecomingyearstogrowitscloudofferings.

199



International & Domestic Infrastructure &

Trunk Fibre Optic Network

SAT-3/WASC/SAFE

SEA-ME-WE-4

DMCS

BDM

SEA-ME-WE-3To Europe,Middle East & South Asia

To Europe, Middle East & South Asia

To Indonesia

To Indonesia

BRIGHTTo Indonesia

SEA-ME-WE-3To Europe, Middle East& South Asia

To Africa,India & Europe

To Europe & Asia

To Asia Pacific

APCN2To ASEAN & Asia Pacific

Trunk cable

Malaysian domestic submarine cable system (MDSCS)

Fibrecomm

Fiberail

Legend

Satellite

Earth Station

5 International cable landing stations

7 Domestic cable landing stations

Trunk nodes

AAGTo Asia Pacific & USA

Measat 391.5º E

ABS175.0ºE

Apstar 6134.0ºE

Apstar 776.5ºE

Apstar 5138.0ºE

Intelsat 1766.0ºE

Asiasat 3S105.5º E

Intelsat 1068.5ºE

JCSAT 3A128.0º E

Insat 4A/2E83.0º E

Intelsat 19166.0º E

Intelsat 90460.0ºE

NSS 695.0º E

Intelsat 90664.0ºE

Asiasat 5100.5º E

International SubmarineCable System

Kuala Muda

Subang Switch

SriDamansara

NilaiAIMS

Cyberjaya

TPM

Graha Maju

Melaka

Shah Alam Kuala Lumpur

K. Terengganu

Kenyir

Kota Bharu

Kuching

Bintulu

Miri

Labuan

Kota Kinabalu

Kangar

FLAG

CAHAYA MALAYSIA

Alor StarBukit Kayu Hitam

Gurun

Kota Setar

ChupingPadang Besar

To ThailandTo Thailand


Sungai Rengit

MSC Cyberport

Kudat

MenggarisKota Belud

Papar

Beaufort

Tenom

Keningau

Kalumpang

Tawau

Telupid

Segaliud Sandakan

Lahad Datu

Temerloh

Kg. Awah

Segamat

Kluang

Seberang Jaya

Ipoh

Taiping

Semabok

Batu Pahat

Seremban

Yong Peng

SkudaiMenara Ansar

EquinixGlobalSwitch

Kulim HitechJunjung Tanah Merah

Pasir Mas

Tumpat

Paka

RantauPanjang

Bayan Baru

Papan

Kuantan

Mersing

Cherating

GeorgetownPenang

Johor Bahru


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SAT-3/WASC/SAFE

SEA-ME-WE-4

DMCS

BDM

SEA-ME-WE-3To Europe,Middle East & South Asia

To Europe, Middle East & South Asia

To Indonesia

To Indonesia

BRIGHTTo Indonesia

SEA-ME-WE-3To Europe, Middle East& South Asia

To Africa,India & Europe

To Europe & Asia

To Asia Pacific

APCN2To ASEAN & Asia Pacific

Trunk cable

Malaysian domestic submarine cable system (MDSCS)

Fibrecomm

Fiberail

Legend

Satellite

Earth Station

5 International cable landing stations

7 Domestic cable landing stations

Trunk nodes

AAGTo Asia Pacific & USA

Measat 391.5º E

ABS175.0ºE

Apstar 6134.0ºE

Apstar 776.5ºE

Apstar 5138.0ºE

Intelsat 1766.0ºE

Asiasat 3S105.5º E

Intelsat 1068.5ºE

JCSAT 3A128.0º E

Insat 4A/2E83.0º E


Intelsat 90460.0ºE

NSS 695.0º E

Intelsat 90664.0ºE

Asiasat 5100.5º E

International SubmarineCable System

Kuala Muda

Subang Switch

SriDamansara

NilaiAIMS

Cyberjaya

TPM

Graha Maju

Melaka

Shah Alam Kuala Lumpur

K. Terengganu

Kenyir

Kota Bharu

Kuching

Bintulu

Miri

Labuan

Kota Kinabalu

Kangar

FLAG

CAHAYA MALAYSIA

Alor StarBukit Kayu Hitam

Gurun

Kota Setar

ChupingPadang Besar



Sungai Rengit

MSC Cyberport

Kudat

MenggarisKota Belud

Papar

Beaufort

Tenom

Keningau

Kalumpang

Tawau

Telupid

Segaliud Sandakan

Lahad Datu

Temerloh

Kg. Awah

Segamat

Kluang

Seberang Jaya

Ipoh

Taiping

Semabok

Batu Pahat

Seremban

Yong Peng

SkudaiMenara Ansar

EquinixGlobalSwitch

Kulim HitechJunjung Tanah Merah

Pasir Mas

Tumpat

Paka

RantauPanjang

Bayan Baru

Papan

Kuantan

Mersing

Cherating

GeorgetownPenang

Johor Bahru

201



TM Worldwide Coverage

Measat 391.5º E

ABS175.0ºE

Apstar 776.5ºE

Intelsat 1766.0ºE

Intelsat 1068.5ºE

Insat 4A/2E83.0º E

Intelsat 90460.0ºE

Intelsat 90664.0ºE

Apstar 6134.0ºE

Apstar 5138.0ºE

Asiasat 3S105.5º E

JCSAT 3A128.0º E


NSS 695.0º E

Asiasat 5100.5º E

DMCS

DMCS

BRIGHT

BRIGHT

MDSCS

MDS

CS

MDSCS

MDSCS

MDS

CS

MDSCS


202



Measat 391.5º E

ABS175.0ºE

Apstar 776.5ºE

Intelsat 1766.0ºE

Intelsat 1068.5ºE

Insat 4A/2E83.0º E

Intelsat 90460.0ºE

Intelsat 90664.0ºE

Apstar 6134.0ºE

Apstar 5138.0ºE

Asiasat 3S105.5º E

JCSAT 3A128.0º E


NSS 695.0º E

Asiasat 5100.5º E

DMCS

DMCS

BRIGHT

BRIGHT

MDSCS

MDS

CS

MDSCS

MDSCS

MDS

CS

MDSCS

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trust

206 CustomerRelations210 BoxArticle–RedefiningCustomerExperience214 TrustUs–TheEmployerofChoice219 TrustUs–WorkplaceSafetyComesFirst224 CorporateResponsibility

Key Initiatives

The heart of our business lies in serving people and we go the extra mile to touch the lives and meet the needs of the communities we operate in.

CUSTOMeReXPeRienCe


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Key Initiativeswww.tm.com.my

All businesses place emphasis on long-term relationshipswith customers as a means to establish stability in today’scompetitive marketplace. At TM, Customer RelationshipManagement(CRM)Analyticsisusedasastrategytosolidifyourcustomerrelationsandatthesametimereduceourcostsand enhance productivity as well as business profitability.CRM Analytics equips us with valuable knowledge aboutour customers which, in turn, allows us to customise ourinteractionswiththem.

Throughout2012,TMlaunchedvariousCRMAnalytics-drivenmarketingstrategiestoincreasetheconversionratesofup-sell and cross-sell campaigns, reduce churn and expediterevenuerealisationbyofferingtherightproductsandservicesat the right time. This was done through direct marketingandtailoredcommunicationviaSMS,directmailers(DM)andelectronicDM.Betterresponsefromourmarketingcampaignsallowedforareductioninpromotionsandaclearerpictureofinvestments.

Inaddition,CRMAnalyticssupportsoureffortstorewardourloyalcustomers.During theyearunder review,weengagedourcustomersinanumberofloyaltyprogrammesundertheumbrellaofTMRewards.TofurtheraddvaluetoTMRewards,which is a free service, we extended personalised offeringssuchasbirthdaygreetingstocreateasenseofbelongingtotheTMfamily.

TM Rewards, which entered its second year, continuedto attract more customers. As of end 2012, it had about1.2 million members and the number keeps increasing.Points earned by customers can be redeemed for billrebates or attractive merchandise from our e-catalogue.Our partners, meanwhile, offer discounts, free gifts andexciting deals such as travel and insurance coverage.TM Rewards also brings to our loyal customers and theirfamily free knowledge enrichment seminars and eventscatering for children, through whom we are engagingour next generation of customers. For membership, visitwww.tm.com.my/tmrewards or call 1-800-88-8887. TMRewardscanalsobefollowedonFacebookandTwitter.

faCts at a GlaNCE

improvementinavailabilitybackupservice TMRewardsmembers

increaseinServiceLevelGuarantee(SLG)forIPVPNcustomers

95.3 % >1.2 million

99.6 %

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Key Initiatives www.tm.com.my

Customer Relations

iCARE PRIMEFollowing the success of iCARE Prime as the platform forall fulfillment and assurance activities for telephony andStreamyxservicesin2010,TMlaunchedyetanothermilestonebillingplatformon12August2012.Thisistobeimplementedover 16 months in three major deployments, starting on 5March with telephony and Streamxy services covering theconsumer segment. Existing customers were migrated instagesaccordingtotherespectivebillingcycles.Byend2012,atotalof1.28millionconsumeraccountshadbeenmigratedtothenewbillingsystemwhichofferscustomersthefollowingbenefits:

• consolidatedtelephoneandStreamyxbills• detailedinformationonallbillpaymentsandcharges• detailsonsavingsfromrebatesanddiscounts

Theseconddeploymentstartedon3Septembercoveringtherest of the customer segments – namely SMEs, Enterprise,Government, Wholesale and Global – together with theremainingConsumersegments.

CONTACT CENTREWe continued to enhance the customer experience throughvarious initiatives across all customer touch points.Transformation programmes were implemented to elevateoverallserviceexcellence,professionalcustomerengagementandfirstcontactresolution(FCR).

VOICE, BROADBAND AND UNIFI CONTACT CENTRE EVOLUTIONDuringtheyear,weworkedonprovidingsmarterandbetterservicetobringgreaterbenefitstoourcustomers.Wetestedandthenimplementedvariousinnovationsinservicedelivery,includingmoreonlineandself-serviceoptionsforinteractionwiththecontactcentre.Thesefreeupfrontlinestaffsotheycan concentrate on more complex cases. We also improvedvarious processes and enhanced their implementation. Wehavepositionedback-endactivitiestothefrontsocustomersarewell-informedwhentheyfirstcontactus;andempoweredouragentsatthecontactcentretowaiveadjustments.ThesehaveimprovedourFCRandservicelevel(SL)whilereducingourabandonmentrate(AR).

TheUniFiContactCentrehandledapproximately2.2millioncallsfromcustomers,comparedwith1.2millioncallsin2011.While the number of calls increased 44.0%, partly as theresultofUniFi’sorganicgrowth,wewereabletoleverageonourCustomerExperiencePerformance (CEP) lab to furtherimproveouroverallcustomerengagement.

FIRST CONTACT RESOLUTION (FCR)In2012,TMinitiatedandadoptedcustomer-orientedKPIstoimprovethecustomerexperienceatourcontactcentresforVoice,BroadbandandUniFiservices.FCRisusedtomeasuretheeffectivenessofthecallcentres’customerservice.

CALLS REDUCTION VIA ALTERNATIVE CHANNELS TMstrivestoofferquickandhassle-freecommunicationforcustomers24/7viaalternativechannelsthatincludetheTMPortal, SMS, interactive voice recognition (IVR) and e-mail([email protected]).Withthesechannels,thereisnoneedtoqueue and customers can contact TM at their convenience.Various self-service features have been incorporated forVoice,BroadbandandUniFisuchasfaultreporting,accountalerts, rebate status and billing errors, product inquiries,product promotions, and checking on service availability aswellasorderstatus.

SELF-SERVICE VIA SMS OurSMSservicewasdesignedtocaterforacompletevaluechain encompassing fulfillment, assurance, complaints andbillingforVoice,BroadbandandUniFi.Theservicecomprisestwo main components: self-service and auto-notificationservice. The self-service function provides alternativechannelsforcustomerstointeractwithTMrelatedtoproductsandservices,reportingfaultsandbillingenquiries.Theauto-notification function provides customers with informationrelatedtoapplications,faultsandbillingstatus.

This solution is part of TM’s initiatives to Keep CustomersInformed(KCI)andenablethemtogetfastresponseonsimpleand routine requests such as application status updates,troubleticketstatusandbillingrebatestatus.Customerscanalso receive telephone bill statements, payment reminders,re-connection notification and the latest TM promotions viaSMS while being able to lodge fault reports for telephonyand Internet using the service. In the year 2012, SMS62100


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generated huge traffic of about 1.97 million messages tocustomers, contributing to a 2.0% call reduction at the 100ContactCentre.

SELF-SERVICE VIA INTERACTIVE VOICE RECOGNITION (IVR)IVR Self-Service solutions were developed as an alternativecustomerinteractionchanneltoreachtheVoice,BroadbandandUniFi Contact Centre. These self-service solutions improvedthecustomerexperienceandshortenedthequeuestoreachacontactcentreagent.TheIVRSelf-ServiceautomatesroutineTM100ContactCentrelive-agentactivities,offeringservicessuchasautotechnicalreportcreation,billinginformationandcheckingon thestatusofapplications.Thesolution isakeyinitiativeoftheCallAvoidanceStrategy2012.IVRSelf-Servicehas reduced inboundcallsbyanaverageof8.0%at the100Technical Contact Centre, 22.0% at the 100 Billing ContactCentreand44.0%atthe100ProductContactCentre.

STRENGTHENING THE COMPLAINTS FRAMEWORKAs we put our customers at the centre of all our dailyoperations,werealisedtheneedtostrengthenourcomplaintsframework. In mid-2012, therefore, we standardised thecomplaints definition across all products, ensuring ourfrontlinersareabletocategorisecomplaintsaccordingly.Thenwe conducted a complaints root cause analysis, identifyingandgroupinggapsandstrategisingonactionstobetakentoaddressthecomplaints.

Wealsodrovehomethemessagethatmanagingcustomer’sexperience iseverybody’sbusiness–allouremployeesandpartnersareresponsiblefortheiractions.

DATA CONTACT CENTRE EVOLUTIONFulfillment for Data Services

TM embarked on two main customer service improvementinitiativestoaddressourdatacustomerfulfillmentneedsandtohavemoreefficientandfasterservicedelivery.FirstTimeRightpromotessufficienttechnicalinformationandcustomerreadiness for service delivery, and ensures each order istracked and pushed for fastest completion. As a result,we improved our data service delivery promise, averaging98.1% for Internet Protocol Virtual Private Network (IPVPN)(maintainingperformancefrom2011)and97.7%(from93.3%in2011)forTMDirect.

2012wasachallengingyearforfulfillment,especiallyonthe1Gov*Net Project. A total of 10,830 circuits were delivered,markinganincreaseof47.5%from2011,withdeliveryperiodwithin 20 days and ready-for-service deployment successrate of 95.0%. Our quest for excellence in data servicesdelivery was supported by stringent end-to-end projectmanagementsupportedbyprojectmanagementtoolPMCOT,the establishment of delivery war rooms, redeployment andmobilisationofworkforce,andimprovedsystemfunctionalities.

Data Services Assurance

TMembarkedonanewmonitoringsystem,calledCustomerEquipment Monitoring (CEM) for managed IPVPN, tohastenthedetectionof faultyservice,soas toprovideearlynotification to customers on pending downtimes. With thissystemweareabletoisolatethefaultatthefrontend,henceshortentherestorationtime.Besidesmonitoringalarms,wealso identifypreventivemaintenanceworkfromtheanalysisofevent logsfromcustomer’sroutersmanagedbyTM,asameansofensuringahealthynetwork.Asaresult,theServiceLevel Guarantee (SLG) for IPVPN customers has increasedfrom99.1%to99.6%,whiletheavailabilityofbackupservicehasimprovedfrom91.9%to95.3%.

Knowledge Management

In 2012, CSM embarked on a Knowledge Management (KM)initiative thatenables thesingleknowledgeand informationrepository to further enhance our frontliners’ competenciesandcapabilities.IntegrationwithTM’sCustomerRelationshipSystems,NOVAandiCPallowsfrontlinerstoimproveourFCRandoverallcustomerexperience.Astructuredandformaliseddiagnostics feature further allows frontliners to bettertrouble-shoot customer issues enabling more resolutionupfront.KMwillultimatelybeakeyplatformsupportingtheentireorganisation.

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Box Article

SOCiaL MeDia: ReDeFininGCUSTOMeR eXPeRienCeTHE CHANGING CONSUMER AND SOCIAL MEDIAAssocialmediahastakentheworldbystorm,businessesarefeelingextremepressuretobewheretheircustomersare–namelyonpopularplatformssuchasFacebookandTwitter, where new rules of customer engagement arebeingwritten,changingthedynamicsofhowconsumerscommunicatewithbrandsandviceversa.

In response to this trend, corporations are ferventlybuilding social media programmes to get their brandsclosertocustomers.Butarecustomersasenthusiastic?Most do not engage with companies via social mediasimplytofeelconnected.Itturnsout,customersneedtobeconvincedtheirtimeiswellspent.

Toleverageonthepotentialofsocialmediasuccessfully,TMhasembarkedondesigningexperiencesthatdelivertangible value in return for customers’ time, attention,endorsement and support. From the manner in whichwe communicate with our customers to the methodsweusetokeepthemupdatedonthelatestproductsandservices,ourcustomersareatthecentreofourdecisionmaking process, and thanks to social media, we nowunderstandourcustomersmuchbetterthaneverbefore.

‘KNOW ME!’ – THE NEW CUSTOMER MANTRAWhenutilisedoptimally,socialmediaoffersacompanytheopportunitytogainaccesstoawealthofinformationon customer expectations, preferences and their ever-changingneeds.Equally,itallowsenduserseasyaccesstoinformationoncompetitorproducts,enablingthemto

compareandmakeinformeddecisions.Customersalsoshareinformation and opinions with peers, and are influenced bypeerrecommendationsandreviews.

Taking all of this into consideration, we have approachedsocial media to influence the conversation on the platformandimproveourbrandsentiment.ThisisdonebyplacingtheTMbrandinanadvantageouspositionoverourcompetitors.


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TM IN SOCIAL MEDIAIn becoming a truly customer-centric organisation, TM hasfurther strengthened its presence in the social media byadoptinginternationalbestpracticestobecomeaprominentbrandonline.Ourapproachhasbeenintegrated,meaningwedonotfocusonlyonbrandingandmarketingbutalsoonthedevelopmentofmeaningfulrelationshipswithourcustomers.

Toachievethis,twokeyTMTwitteraccountswerecreated:

• @TMCorp – The official Twitter account for TMproviding the latest updates on all our productsand services as well as providing communicationssupport for all other TM-related social mediaaccounts.

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Box Article

• @TMConnects – Serves as the customer serviceplatform for TMVoice, UniFi and Streamyx; andotherTMservices.

The establishment of @TMConnects creates a newchannel for our customers to provide us with theirfeedback, complementing existing TM customer touchpointssuchastheTMCallCentre,TMpointoutletsande-mail. This new engagement channel also serves asa complaints management tool, in line with our ‘KeepCustomer Informed’ (KCI) initiatives. @TMConnectsallows subscribers to provide feedback, ask questionsabout our products and services as well as submitcomplaintsandconcernsthattheymayhaveaboutTM.Onourpart,weget toengagewithourcustomers inamorepersonalised,casualandinteractivemanner.

Responsetotheseinitiativeshasbeentremendous–asof end 2012 we had 9,595 followers for @TMCorp and4,997 for @TMConnects. We have also seen significantimprovementinbrandsentimentinthesocialmedia.Inotherwords,TMistrulybecomingabrandthatisintunewiththechangingneedsoftheconsumernotjustinthewayweprovideourproductsandservicesbutalsointhewayweengageourcustomers.

Thesaying“it’smuchmoreprofitabletokeepanexistingcustomerthangolookingforanewone”stillholdstrueinthisageofthehyper-connectedconsumer;andwhileotherbrandsarestilltryingtofindafootinginthesocialmedia space, TM is well-positioned to take advantageof themanybenefits itbrings.Wewill leverageonourvantage point by continuing to explore innovative waysto enhance our service delivery to further enrich thecustomer experience while becoming Malaysia’s mostprominentsocialmedia-enabledorganisation.

2012: KEEPING OUR FINGERS ON THE PULSEIn 2012, TM participated in several large-scale socialmedia campaigns and numerous smaller ones throughEveryoneConnectsandTeamMalaysia.

EveryoneConnects (www.everyoneconnects.com)

EveryoneConnects (EC) is a social platform created by TMin2009withasonganda lovestory. Iteventuallymarkedahistorical social media event where 9,000 youths throngedJalan Bukit Bintang in Kuala Lumpur for the largest eversing-along.Sincethen,ECcontinuestostandoutinthelocalmusic, gadgets and lifestyle scene, as well as in the socialmediasphere.ECwonanawardfortheBestUseofConsumerEvents/ExperientialcategoryattheUrbanscapes2011.

Throughout 2012, EC celebrated Malaysia’s major festivalssuch as Chinese New Year, Hari Raya and Deepavali withOpen House Festive applications that presented games andcontestsinwhichanaverageof700playersstoodachancetowinthelatestgadgets.Apartfromchallengingtheplayersforgreatprizes, the festiveapplicationspromotedgoodwillandsharedMalaysia’srichculturalheritageinafunandengagingway.

InadvanceoftheJune2012premiereofMarvel’sTheAvengers,ECenticedlocalyouthtoparticipateinaTwittercontestwhichgave away free tickets to the screening. 500 excited fansthrongedthescreeningeventandwentbackhomewithwidesmilesontheirfaces.


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The Rockaway Festival 2012 in October 2012 was a hitamong the local youth and fans of EC. Another ticketgive-away contest was organised via EC Twitter account,@every1connects creating a positive buzz for TM as well asadding 5,000 new Facebook fans and more than 600 new@every1connectsfollowers.

Continuousengagementwithyouthsthroughtheplatformoftheirchoice,iesocialmedia,ispartofourbusiness.Nurturingour future customers today is a must for TM to remain thetop-of-mind brand for high speed broadband products andservices.

As of end December 2012, the EveryoneConnects Facebookpage has 427,451 likes and its Twitter account has 2,791followers.

Team Malaysia (www.tm.com.my/teammalaysia)

Pride,passionandloveforthesportingspiritformtheessenceofTeamMalaysia.TeamMalaysiaisaTMinitiativethatseekstoinspireournation’ssportingtalents,guidingandinspiringMalaysians tobecomeworld-classathletes. Italso fuelsallMalaysianswith loveandpassion forall thingssports.Thatincludes appreciation for our national athletes and theirachievementsandsacrifices,nomatterhowbigorsmall.

In2012,TeamMalaysiawentallouttosupporttheMalaysianOlympics contingent on the ground and online. TeamMalaysia’s integrated play to excite, engage and mobilisefans was very well received by supporters of all ages and

walksoflife.Socialmediaplayedanintegralpartofthecampaign from tweet-ups, daily updates related to theTeamMalaysiaFanRun,theSuperfanonlinecontest,andreal-timereportingofselectedOlympicsmatchesbyourveryownCitizenJournalist.

Allofthesecapturedthenation’ssentimentsthroughoutthe event. Well wishes, words of encouragement andapplausewereheardloudandclear inthesocialmediaspace,placingTeamMalaysiaandTMinapremierspacewithintheconsumer’spsyche.

Our social media initiatives also supported TeamMalaysia’sMencariRamliSeason1and theAFFSuzukiCupthroughvariouspostsandcontests.

The use of social media as a marketing platform isintended to deliver our aspirations to Malaysia’s trendyyouth. Team Malaysia and EveryoneConnects act asavenues for conversation where opinions, suggestions,recommendations and even complaints are heard andresponded toeveryday.This is themostvaluableassetwe have – the voice of Malaysia’s youth and the abilitytoengagewiththeminmanyaspectsoftheirlives,beitthroughsports,music,moviesor lifestyle.Thisway,weareabletocapturetheirneedsand,inturn,improvethedeliveryandperformanceofourproductsandservices.

As of end 2012, the Team Malaysia Facebook page had318,964 likes and its Twitter account @TeamMsia had26,968followers.

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TM – The eMPLOyeROF ChOiCe


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BUILDING A WORKPLACE OF DIVERSE OPPORTUNITIESTM is fully aware of the critical role its employees playin maintaining the Company’s competitive edge. There isconstant emphasis on attracting and retaining the besttalent,andcreatinganinternalenvironmentthatencouragesemployees to realise their true potential. This is achievedthrough a range of initiatives, from structured learning anddevelopmentprogrammestocohesiveleadershipandcareerdevelopment,systematiccoachingandpersonalenrichmentopportunities.

Emphasis on employee development and well-being haveearnedtheCompanynumerousaccoladesovertheyears.In2012,TMwontheGoldawardfortheEmployerofChoicebytheMalaysianInstituteofHumanResourceManagement(MIHRM)inrecognitionofsustainedandcontinuouscommitmenttothedevelopmentofitshumantalent.

AstheCompanygrows,theneedfortalentincreasesand,in2012,TMorganiseditsinauguralCareer&EducationFair.Itreceived an overwhelming response from 18,726 attendees,

84.0%ofwhomwerebelowtheageof28.ThisstrengthenedTM’spositionasthepreferredemployeramongtheyoungergeneration, and contributed to TM winning Malaysia’s 100Leading Graduate Employers in the TelecommunicationsSector for the first time. The award was based on anindependent survey conducted among more than 12,000universitystudentsandfreshgraduates.

Opportunities in Learning & Development Training isanongoingactivityatTMandbeginswhennewrecruits jointheCompanyandareplaced intheOnboardingProgramme. The programme serves to welcome the newmembers of TM’s family and provides them with a broadperspective of the Company’s wide-ranging businesses, itsvision,missionandvalues.

faCts at a GlaNCE

employeestrainedinHSBBandIP-relatedprogrammes executivesselectedforLeadershipAssessment

executivesbenefitedfromtheRewardsTransformationnewCompensationPlan

20,924 2,1069,287

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TM – The Employer of Choice

As employees progress within the Company, they are givenincreasingly more specialised training, designed to equipthem with the knowledge and skills required to performoptimally and to acquire positions of greater responsibility.TMTrainingCollege(TMTC)issensitivetoanyskillsgapsthatmay exist in TM’s lines of business (LOBs), and constantlycustomises technical, functional, motivational or leadershipskillsdevelopmentprogrammestomeettheserequirements.

TMTCcomprisesthreemainunits–theTechnicalAcademy,Customer Service Academy and Leadership DevelopmentUnit.In2012,TMTClaunchedtheTrainingDashboard,enablingSeniorManagement tomonitor training initiatives thathavebeencarriedoutandselectfrommodulesthatareavailableand relevant to further develop employees’ capabilities. Atotalof76,185participantsweretrainedinvariousskillsareasunderTMTCduringtheyear.

Mohd Khalis Abdul Rahim, Chief Human Capital Officer TM, receiving the award for Malaysia’s 100 Leading Graduate Employees – Telecommunications Sector in November 2012.

GHCM Management with NUTE President and committee at the Collective Agreement kick-off 2012.

All jubilant at TM Group Awards Night 2012 held at Multimedia University.


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Technical Academy

Technical Academy (TA) provides specific technical skillstraining as required by the LOBs. TA trainees have accessto technology-enriched syllabi, taught by highly competenttrainers using state-of-the-art equipment to provide qualityhands-on experience. TA is responsible for ensuring TM’stechnicalemployeesarepreparedtosupporttheCompanyasitevolves intoan InformationExchange,andabout56.0%ofall TM training takes place in TA. In 2012, a total of 20,924employees were enrolled in high speed broadband (HSBB)and IP-related modules such as NOVA R3, NOVA R3 SOLO,NEPS,CCNP,CCNA,IPV6andHighSpeedBroadbandActiveandPassiveTraining.

Customer Service Academy

The Customer Service Academy (CSA) was established todevelopTM’shumancapitalcapabilitiesintermsofdeliveringaWow!CustomerExperience.Akeyprogramme introducedwasSuperbandMeaningfulInteractionLeadingtoExcellence(SMILE),whichseekstoenhanceTM’soverallcustomerservicesatisfactionbytargetingfrontlinerssuchasTMpointCustomerService Representatives (CSR), SAVE Angels, resellers andpersonnel at Regional Network Operations (RNO) and TM’sContactCentre.SMILEcomprisesthreesemestersoftrainingand in 2012, 3,756 participants completed the programme,markinganincreaseof188.0%fromtheinitialtarget.

Leadership Development Unit

LeadershipDevelopmentUnit(LDU)isinchargeofbehaviouralcoursestargetingmanagementandpotential leadersofTM.It runs the highly successful Teaming With Passion (TWP)programmeandCoaching.

TWP started in late 2009 to create corporate excellence viastrong leaders who are able to inspire positive change intheir followers. In effect, TWP united TM employees as oneteam in one spirit towards one direction. Phase 2 of TWPkickedoff in2011to inspiregreatercustomercentricityanda performance-based culture. It has improved day-to-daybusiness operations by igniting a passion to deliver qualityserviceinTM’semployees.In2012,atotalof3,667employeesattendedthisprogramme.

Coachingallowsforpersonaltransformationandcareerroletransition for both the coach and employee, which helps toboost employee morale. At TM, coaching sessions facilitatemorepersonalandinteractivelearning,andpromotecreativity

for continuous improvements in line with the organisation’saspirations.Severalcoachingprogrammesweresuccessfullyimplemented for various LOBs in 2012. During the year,the Company also coached 15 new trainers to support theprogramme.

Innovative Training Delivery

TMTC has recently adopted a Learner-Centric Approach inits training delivery via Self-Learning and Remote VirtualLearning(RVL)modules.Self-Learningallowsemployeestogo through online training modules on their own, at a pacethatbestsuitsthem.Currently,17Self-Learningmodulesareavailableatnocost.RVLisanewertechnologybeingdeployedunder which a trainer and trainees are brought togethervirtually in an online learning environment, where they cancommunicate and interact using Internet technologies suchasweb-conferencing.Thesystemisbeingdevelopedinthreephases.Thefirstphasewentliveinthethirdquarterof2012,and the entire system is scheduled to be available by thesecondquarterof2013.

Back To Oxford

BacktoOxford,launchedinMay2012,isanEnglishenrichmentprogramme developed mainly for Group Human CapitalManagement (GHCM) to learn the language in a fun andinteractiveway.TheprogrammeaimstoimprovetheEnglishproficiency of employees and increase their confidence incommunicating in English. The first batch of participants ofthisprogrammegraduatedinFebruary2013.

Career Development

Assessment Centre

In 2012, the Assessment Centre launched a Career Pathingprogrammethatallowsforqualifiedandeligibleemployeestoberecognised.UndertheUpgradingandPromotionExercisefor Non-Executives, a total of 1,494 non-executives wereupgradedand348werepromotedeffective1October2012.

In order to identify potential leaders, TM also conducts aLeadership Assessment that indicates the readiness ofexecutives for promotion to the next level up the corporateladder.ThisLeadershipAssessmentmeasurescompetenciesalongfiveareasusingdefinedtoolsandmethodology.Todate,atotalof2,106executivesandmanagershavegonethroughtheLeadershipAssessment.

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TM – The Employer of Choice

Leadership Development TM focuses on building the capabilities of its leaders andpotential leaders to meet its functional requirements,ensuring they have the right behavioural skills to drive theCompanytogreaterheights.Thisfurtherensuresaconsistentsupply of leaders groomed from within the organisation.As of 2012, a total of 727 talents have been identified andare being given the necessary exposure to develop theirprofessionalandleadershipskills.

Nurturing Leaders

TM implements a structured Fast Track Programme (FTP)to build the potential of identified executives. In 2012, the24 participants of this programme underwent several jobrotationsandassignmentswithintheGrouptogaininvaluableexperienceandexposure,andtohonetheirstrategicthinkingskillswithintheLOBs.TalentEngagementProgrammesarealsoheldtoprovideyoungertalentstheopportunitytoengagewithleaders,andbeinspiredbytheirsuccessstories.

Reward and CompensationTM’s Rewards Transformation was launched in 2010 tonurture a high-performance culture in which employeesarerewardedbasedontheirperformance.Beginningwithahigherminimumwagefornon-executives,thetransformationcontinued with an upgrading exercise to promote theacquisitionofadditionalrolesandknowledge.NextcametheintroductionofthePerformanceLinkedWageSystem(PLWS).

InJuly2012,anewCompensationPlantiedtoperformancewas introduced for executives to be competitive with themarket. A total of 9,287 executives benefited from this newCompensation Plan. The next phase will look at providingflexibilityandchoicestoemployeesinmanagingtheirbenefits.

Engagement OpportunitiesTMstrivestocultivateaclimateofdiversityandinclusiveness,supported by various employee engagement activities, suchas celebrating festivities like Chinese New Year, Hari Raya,Deepavali and Merdeka as 1TM family. This has resulted ina highly engaged workforce aligned with the organisation’sgoalsandvalues,asshownbytheresultsoftheGroup-wideEmployeeEngagementsurvey.

Employee Engagement Survey (EES)TM has been conducting the Employee Engagement Surveysince 2009. In 2012, the results indicated an employeeengagement index of 90.0%, which is 13 percentage pointshigherthantheMalaysiannorm,asignificant15percentagepoints higher than the Global Telco (GT) norm and fivepercentage points better than Global High PerformingCompanies(GHPC)norm.Comparedwith2011,theareas inwhich TM had improved the most were Recognition, StrongBelief inProductandServicesQuality,OrganisationChangeandSupportiveServiceEnvironment,indicatingbetterwork-lifebalanceamongemployees.

Union Engagement

TM recognises the Unions as an extension of its humancapitalarmandengageswiththemforbettercommunicationGroup-wide and to ensure all employees share the Group’saspirations. There are four Unions representing TM’s non-executives: the National Union of TelecommunicationEmployees (NUTE), Union of Telecoms Employees Sarawak(UTES), Sabah Union of Telekom Employees (SUTE), andSabahUnionofTelecommunicationsEmployees(SUTEN).

In order to maintain a cordial and harmonious industrialrelationship with its Unions, any new Company initiative isdiscussedwiththempriortobeingimplemented.Alongwithopenchannelsofcommunication, issuesaresettledquicklyandamicably.In2012,TMtargetedandachieved‘NoIndustrialDisputes’.

Salam Mesra Customer Engagement Programme

To allow its employees to get closer to customers andunderstand them better, GHCM initiated a Salam MesraCustomer Engagement Programme. This saw about 5,000employees from headquarters and non-sales units from thestatesgotothegroundandmeetcustomersdoor-to-door.Theprogrammeranfor10weeksfromOctobertoDecember2012.

Participation inthisprogrammeprovedtobeanewpositiveexperience for the employees, who obtained greater insightinto ground operations. This programme also proved thatTM’semployeesareopen toadapting toanewMindsetandWork Culture Change in line with the approach put forwardbyGroupCEODato’SriZamzamzairaniMohdIsafocusingonthinkingout-of-the-boxandworkingbeyond-our-box.

With the right attitude and training and developmentprogrammes in place, TM employees are ready to take onbiggerchallengestosupporttheCompanyasitmovesforward.


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SaFeTyCOMeS FiRSTOccupational Safety, health and environment (OShe)

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DespitecontinuouseffortstocreatesafetyawarenessamongTM employees, our overall OSHE performance in 2012wasslightly lower than in thepreviousyear.Thenumberofaccidentsincreasedandtherewerealsofourfatalaccidentsinvolvingourcontractors’personnel.

SAFETY PERFORMANCETheyearunderreviewsawatotalof98accidents,38.1%morethanthepreviousyear.Thisrepresentedroughly1.15accidentsper1,000employees.However,therateissignificantlybetterthanthenationalaverageIncidentRate(IR)of3.4injuriesper

Safety Comes First

1,000workers (2009).Mostof theaccidentswere falls fromheight,ieladders,polesandroofs.

WhileTMhasachievedzerofatalitysince2010,ourcontractorsrecorded four fatal accidents among their workers in 2012,markinganincreaseofonecasefrom2011.

ACTIVITIES & PROGRAMMES

ComplianceTM complies with Occupational Safety and Health Act (OSHA) 1994 and its regulations in order to promote a safe and healthy work culture.

Steering & State OSHE Committees

In2012,werestructured theTMGroupOccupationalSafety,Health and Environment (OSHE) Steering Committee andState OSHE Committees to provide a link from on-sitecommittees to the Steering Committee, allowing for moreeffectivecommunication. Inaddition, theSteeringandStateCommitteesmetonaquarterlybasis,andcompliedwithalltheotherrequirementsofOSHA1994andOccupationalSafety& Health (OSH) Committee Regulations 1996. The SteeringCommitteealsovisitedtwoTMhillstationsatGunungJeraiandGunungLedangin2012.

faCts at a GlaNCE

contractorstrained nationwidetrainedinAuthorisedEntrantandStand-byPerson(AESP)module

NationalOSHExcellenceAward2012

40,000 356 employees

1st place

Mohd Khalis Abdul Rahim, Chief Human Capital Officer at the launch of Safety and Health Campaign Sarawak in April 2012.


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TrainingTremendous efforts are made to improve the knowledge, understanding and competency of TM employees with regards to Occupational Safety, Health and Environment. This is to ensure that OSHE becomes an important aspect of the work environment and is embraced as part of the work culture.

Confined Space Training

An important requirement of the Industry Code of Practice(ICOP) for Safe Working in a Confined Space 2010 is foremployers to provide related training for all employeesand contractors directly involved with working in confinedspaces.Thisistoensuresuchpersonnelhavethenecessaryknowledge,skillsandunderstandingforsafeperformance.

This Confined Space Training is divided into two phases,namely theAuthorisedEntrantandStand-byPerson (AESP)Course, followed by the Authorised Gas Tester and EntrySupervisorCourse.Oncecertified,all the fourcategoriesofemployees [Authorised Entrants, Standby Persons, EntrySupervisors and Authorised Gas Testers] have to undergo arefreshercourseeverytwoyears.

In collaboration with NIOSH, TM developed a customisedAuthorisedEntrantandStand-byPerson(AESPTM)trainingmodulein2011,whichhasbeenapprovedbyDOSH.In2012,NIOSHconducted23AESPtrainingsessionsnationwideforatotalof356employees.

TM Confined Space Medical Examination (CSME)

Under the latest ICOP for Confined Space, all personnelworking in confined spaces must be declared medically fit.TM’sConfinedSpaceMedicalExamination (CSME)hasbeendesigned to specifically test the eligibility of our workers toenter confined spaces. These medical examinations arecarriedoutbyregisteredOccupationalHealthDoctors(OHDs)throughoutMalaysia,andarevalidfortwoyears.

CSME was implemented in January 2012 with the target ofhaving 1,432 personnel examined by December 2012. Asof end 2012, 1,311 personnel have undergone the medicalexamination,ofwhom1,090havebeenclassifiedas‘Fit’,138as‘TemporarilyUnfit’and83as‘NotFit’.

PersonnelwhohavebeenclassifiedasFitareissuedwiththeTMCSMEAuthorisedEntrantcertificatewhilethosewhoareTemporarily Unfit or Not Fit are advised to undergo furtherassessmentsorreassessmentswhereapplicable.

OSHE Promotion at Workplace Continuous efforts are made to recognise OSHE in promoting a safe and healthy working culture.

OSHE Posters

AsspeltoutintheOSHA,1994,oneofthemajorresponsibilitiesof an employer is to provide adequate safety and healthinformationtoallemployees.In2011,theOSHEUnitdevelopedTM’s own safety posters that depict our work environmentandprovideimportantinformationregardingproperconductduring high-risk activities, and use of Personal ProtectiveEquipment (PPE)while introducing the6S (Sort,Straighten,Sweep,Standardise,SustainandSafety)procedure.

In 2012, the team followed up with ergonomic workstationpostersandincidentreportingguidelines.

OSH Campaign

This year, fourstates–Pahang,Sarawak,SabahandPerak– organised OSH Campaigns to increase safety and healthawarenessamongstateemployeesandcontractors’workers.

MENTOR-MENTEE PROGRAMME WITH STATE DOSHThreestates–Johor,PerakandKelantan–implementedanOSHE mentor-mentee programme in collaboration with therespective state Departments of Occupational Safety andHealth(DOSH).

Contractor ManagementVarious programmes were held to improve our contractors’ safety compliance and awareness, with the aim of achieving zero fatality.

NIOSH-TM Safety Passport (NTMSP)

Anestimated40,000contractors’personnelhavebeentrainedunder the joint programme between the National InstituteofOccupationalSafetyandHealth (NIOSH)andTMsince itsinception in late2006. It isworthnoting thatTM is theonlytelecommunications company in Malaysia to enforce thiscustomised OSHE induction programme for contractors’personnel.

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Safety Comes First

Other OSHE–Related Training

Asinpreviousyears,variousotherOSHE-relatedtrainingwasconducted either by external or in-house resources. Theseincluded Basic Occupational First-Aid (BOFA) Train-the-Trainer,ErgonomicsAwarenessTraining,OSHEAudit,OSHEAppreciation Course and OSHE Laws. TM’s OSH ManagerswerealsocalledupontogivesafetyandhealthtalksaspartoftheSupervisoryCourseandOn-BoardingProgramme.

Workplace SafetyTM has taken reasonable and practical steps to identify hazards and minimise work-related risks.

Hazard Identification Risk Assessment & Risk Control (HIRARC) Programme

In 2011, Network Delivery developed an OSH ManagementSystem(OSH-MS)asaresultofthesuccessfulimplementationof the HIRARC programme 2010. In the same year, the TMGroup OSHE Steering Committee made it compulsory forevery TM Operating Company to implement the HIRARCprogramme.OurPropertyOperations(PO)Unitcompletedtheprogramme,withtheassistanceoftheOSHEUnitinthethirdquarterof2012.

AnotherpositiveoutcomeofHIRARCactivitieswasareviewoftheexistingSafeWorkInstructions,whichwascompletedin the first quarter of 2012. Twenty separate Safety WorkInstructionsweredevelopedasaresultofthereview,involvingexperiencedandspecialisedNetworkOperationsemployees,focusingonhigh-riskareasofwork,withinputfromOSHEUnitofGroupHumanCapitalManagement(GHCM)andEnterpriseBusiness Management (EBM). The safety guidelines canbe accessed at Network Operations’ website, and are to beadheredtobyallemployeesandcontractorsworkingunderNetworkOperations,effective1January2012.

Ergonomics Training for Ergo Leaders

In 2012, OSHE Unit trained 31 Ergo Leaders among OSHEpractitionersfromTMheadquartersandstatebranches,anddevelopedErgonomicsguidelines,whichwillbeimplementednationwidein2013.

Audit Programme With DOSH

The OSH audit programme is one of the most importantcomponents of the OSHA 1994 regulations. All state teamsconduct audit programmes with DOSH representatives atleastonceayeartoensureourOSHpracticesareinlinewiththeregulations.

Subsidiaries’ OSHE Programmes

OSHE Unit intends to ensure that all TM subsidiaries arelegally compliant with OSHE laws and regulations, whichinclude establishing an OSHE Policy and Committee, andsubmitting monthly reports to headquarters to keep theGroupupdatedonallOSHEmatters.Theyear2012sawtheinvolvementof11subsidiariesincludingTMFleetAutoleaseinOSHEprogrammesandcampaigns.Overall,26incidentswerereported,buttherewasnofatality.

Safety Performance

Recordable IncidentsAs of December 2012, a total of 26 incidents were reportedby all subsidiaries. Menara KL had the highest number ofincidents (13) followed by VADS (seven), Telekom Sales andServicesSdnBhd(TSSSB)(five)andTMR&D(one).MostoftheincidentsfellunderCategory3(DangerousOccurrences)andCategory5 (FirstAid).The incidentrate in2012was0.3perthousandworkersandthefrequencyratewas0.61permillionhoursworked.

Lost Work Days (LWD)The total lostworkdays (LWD) for thesubsidiarieswas193dayswithTSSSBrecordingthehighestLWDof171days.

Type of AccidentsMostoftheaccidentswerefallsreportedbyMenaraKLandTSSSB, which included falling while on an escalator, fallingdown stairs and falling in the restroom. Other incidentsincluded being stuck in a lift, small fires and cooking gasleakages.


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ACTIVITIES & PROGRAMMESOSHE Awareness CampaignTM’s OSHE team was invited by the Multimedia University(MMU)OSHEteamtosetupanexhibitionboothduringMMU’sSafetyandHealthWeek.

TrainingAs part of efforts to increase OSHE awareness amongour subsidiaries, TM OSHE arranged various workshopsthroughout 2012. These included a gap analysis workshopheld at TM R&D, Cyberjaya, to highlight legal requirementsanddeterminethegapsthatneedtobefilledinordertocomplywithOSHElawsandregulationssuchasOSHA,FactoriesandMachineryAct(FMA)andEnvironmentalQualityAct(EQA).

Anotherworkshop,heldatTMofficeinAlorSetar,focusedonNotificationofAccidents,DangerousOccurences,OccupationalPoisoning and Occupational Disease (NADOPOD). It aimedto teachOSHpersonnelhow toprepare incident reports forDOSHMalaysiaaccordingtoNADOPODregulations.

WAY FORWARDAspartofcontinuouseffortstoimproveworksafety,TMaimsto ensure that all employees, contractors and subsidiariescomplyfullywithallthelegalrequirements,areawareoftheimportanceofsafetyandhealthattheworkplace,andpracticesafetyaspartoftheworkculture.

With a less than favourable OSHE performance this year,especially with regard to accident statistics, we are placinggreater emphasis on enforcement, worksite inspection,complianceauditsandconsequencemanagement. ACHIEVEMENTS

National OSH Excellence Award 2012For the year under review, Pahang was selected torepresent TM to vie for the prestigious National OSHExcellence Award 2012 organised by the NationalCouncilForOccupationalSafetyandHealth(NaCOSH),MinistryofHumanResources.Theyearlyawardsaregiventocompaniesinvariouseconomicsectors,whichhave shown exemplary safety and health practices.After a rigorous audit by the organiser, Pahang wasannounced as the winner in the Communicationscategory.

Inpreviousyears,Kelantan,Penang,Kedah/PerlisandSarawakhavewonthisaward.

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CORPORaTeReSPOnSiBiLiTy

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Inessence,thejourneyfromCorporateResponsibility(CR)tosustainabilityatTMisaboutensuringabalancedtriplebottomline encompassing healthy economic, environmental andsocialviabilityinordertodeliverrealandsustainablevaluetoourstakeholders.Weareguidedinthisbyvariouslocalandinternational frameworks that include the Silver Bookproduced by the Putrajaya Committee on GLC HighPerformance,BursaMalaysia’sCorporateSocialResponsibility(CSR) Framework and the ISO 26000: Guidance on SocialResponsibility. Sustainability is driven by the Board ofDirectorsandTopManagement topermeateall levelsatalldivisions across the Group. Our efforts are focused onEducation, Nation-building & Community and Environment,andarereportedalongthefourdimensionsoftheMarketplace,Workplace,CommunityandEnvironment.

Details of the Group’s CR initiatives and their impact arepresentedinastand-alonereportpublishedannually,namelythe Sustainability Report. Currently in its fifth edition, theSustainability Report offers a wide view of the many CRactivitiesdonebytheGroupand in-depthperspectiveof the

farreachingpositiveimpactthattheseinitiativeshavecreated.TheSustainabilityReportconformstothestringentstandardssetbytheGlobalReportingInitiative(GRI)inwhichthereporthas achieved the Application Level A+ standard for fourconsecutiveyears.Inaddition,the2011SustainabilityReportwas awarded the Best Sustainability Report for Malaysia bythe National Center for Sustainability Reporting (NCSR), anindependent organisation comprising corporations andprofessional individuals committed in implementing anddeveloping sustainable development based in Jakarta,Indonesia.

Weembarkedonourjourneyofsustainabilityafewyearsago,beginningwithaframeworkonCR,whichsawusimplementour community outreach initiatives in a more organisedmanner.ThisprogressedtoacommitmenttoensurethatallourbusinessactionsandactivitiesembracetheprinciplesofCR.Today,inlinewithglobalandMalaysianbestpractices,weare taking our corporate pledge further by focusing onsustainability.

faCts at a GlaNCE

followersof@TMCorp,astakeholderengagementtoolthroughsocialmedia

9,595livesbenefitedfromTM’sSchoolAdoptionProgrammetodate

17,086

Employeeengagementscorefrom2012EmployeeEngagementIndexSurvey,13.0%abovenationalaverage

90.0 %

TMEarthCampparticipantssince2010

3,845

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Corporate Responsibility

MARKETPLACEAs the leading telecommunicationscompany in thecountry,TMplaysacriticalroleinsettinghighstandardsofcorporatecitizenry in the industry by upholding the highest principlesof corporate governance, ensuring the best products andservicesforourcustomers,andmaintainingethicalrelationswithourbusinesspartners.

Corporate Governance Towards Sustainable Business

TM has a sound Corporate Governance (CG) structure thatensuresthehighestleveloftransparencyandintegrity.BothTM’sBoardandManagementplaykeyrolestoensureshort-term financial performance and long-term sustainabilitythrough business ethics, risk management and effectiveinternal controls. At the same time, the roles of the Boardand Management are kept separate to maintain a judiciousbalance of responsibilities and a reliable system to upholdTM’svaluesastheorganisationstrivestoattain itsvisionofbecomingakeyandleadingregionalinformationexchange.

To achieve this, TM abides by both local and internationalCG guidelines. In addition, the Group also conforms to theprinciples and standards recommended by the MalaysianCodeonCorporateGovernancereleasedin2012.

Total Commitment to Customers

Customersarecentraltoourbusinessandoursustainabilitydepends on continued customer loyalty. We thereforecontinually improve our systems to provide customers withan exceptional experience at every opportunity. To furtherimprovecustomerexperience,aCustomerCentricitySteeringCommittee was set up to focus on first contact resolution,tenhancingouralternativecustomercontactchannels(socialmedia,websiteandemails)andstrengtheningourComplaintsFramework. In addition, a new, more robust CustomerRelationship Management (CRM) analytics tool was alsolaunched. This enables TM to better understand the needsofourcustomersforthedevelopmentofanenhanced,morepersonalisedandmeaningfulcustomerexperience.

TM has also fully embraced the social media to furtherenhance our customer engagement. In order to ensure theefficientuseofthesocialmedia,twokeyTwitteraccountswerecreated.@TMCorpisTM’sofficialTwitteraccountthatprovidesthelatestupdates,corporatenewsandannouncements.AsofDecember2012,theaccounthas9,595followers.Meanwhile,@TMConnectsservesas thecustomerengagementchannelon Twitter, and mainly responds to complaints and queries

on our consumer products and services such as TM Voice,UniFiandStreamyx.Asofend2012,@TMConnectshas4,997followers.

In addition, TM has other social media assets on popularsocial media platforms like Twitter and Facebook to caterfor different and specific market segments includingEveryoneConnectsforyouthengagement,TeamMalaysiaforengagementwithsportsenthusiasts,YellowPagesMalaysia,MenaraKLandTMRewards,tonameafew.

Sustainable Procurement

Ourprocurementpoliciessupportprotectionoftheenvironment,encourage social progress and economic development.SustainableProcurementensuresthatweareabletoprocurethebestgoodsandservicesatthebestpriceinanopenandtransparent manner. To make sure that our procurementpolicies are properly implemented, an annual online surveyisconducted toobtain feedback fromsuppliers. In the2012survey,TMobtainedaTransparencyIndex(TI)scoreof7.5outof10,a0.1increasefrom7.4in2011.

We also support local suppliers through our VendorDevelopment Programme (VDP) that was first establishedin1993.Currently,thereare496companiesunderVDPfromvarious industries including Manufacturing, EngineeringServicesandICT.Thesecompaniesareassessedannuallyonvariousparametersbasedonwhichtheyarerankedandtheanalysisoftheirtrainingneedsanalysed.Wethenprovidethesecompanies with holistic development programmes to meettheir needs. Companies that complete these developmentprogrammes successfully are awarded preferred vendorstatus.

E3 Infra: Driving ICT Adoption for Future Growth

Astheneedsofourcustomerschange,wetooevolvetomeetthese;andcurrentlyTMisonajourneytotaketheroleofthenation’sbroadbandchampionfurtherbybecomingakeyandleadingregional informationexchange.Toachieve thisgoal,weareimprovingandenhancingourbusinessprocessesandstructures to become more Efficient, Effective and Elastic.ThisisourE3Infraapproach.

TheE3Infraapproachisencapsulatedinthefollowing:Efficientby being modular, scalable and cost-effective; Effective bymeansofbeingsecured,IPv6-compliant,standard-basedandgreen; and Elastic in the way the approach optimises cloudtechnologiesand isarchitecturallysimple.E3 Infrasupports

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TM’s ambition to become a one-stop centre to meet all theneedsofcorporateclients,providingcompleteandadvancedICT tools required for a sustainable business environmentwhich in turn supports Malaysia’s drive to become a high-incomenation.

WORKPLACETM strives to be the employer of choice by offering a workenvironment that is not only engaging, stimulating andrewarding, but that respects the need for work-life balanceand the personal well-being of individuals. Because adiversifiedworkforceisadynamicandproductiveworkforce,TM isanequalopportunityemployer.Throughdiversity,ourhuman capital effectively contributes to providing the bestpossibleservicetoallstakeholders.

Employee Engagement

TMbelievesinarichemployeeengagementtocreateasenseofpurposeandemotionalbondandconnectiontotheCompany.Several IT platforms are adopted to reach employees at alllevels, includingthe1Intraportal,email,videoconferencingandweeklysnippetsofinformation.In-housepublicationssuchas1Ekspresiand1Suaracommunicatethelatestupdatesonpoliciesandprogrammestoemployees.Inaddition,TMalsoencouragesemployeestoadoptsocialmediaasameansofeffectivecommunications.Increasingly,weusesocialmediaasatooltoengagewithemployeesatbigeventsandactivities.

Festive seasons are also great opportunities for employeeengagement. In line with the spirit of 1TM and 1Malaysia,eventsareorganisedaroundfestiveeventssothatemployeesgettocelebratetogetherandunderstandeachother’sculturesbetter. During these events, employees are encouraged to

wearrelated traditionalcostumes.Examplesof this includedthe TM Raya Merdeka programme which featured traditionalperformancesandaspeciallycreated3DmuralbasedontheMerdekatheme.ForDeepavali,employeescreateda‘kolam’,atraditionally-designedIndianartthemed1TMDeepavaliatthelobbyofMenaraTM.InconjunctionwiththeBumiKuinitiative,TMemployeescollectedover1.5tonnesmaterialstoberecycledasaconcertedactofgoodwilltocelebratetheyearend.

To promote and encourage vertical interaction, Teh TariksessionsareorganisedwhereGroupLeadershipTeam(GLT)members share the Company’s vision with employees in aninformalandpersonalsetting.Atotalof33TehTariksessionswereorganisedin2012:eightwiththeGroupChiefExecutiveOfficer, three with the Group Chief Financial Officer and 22with other GLT members. Over 600 employees took part inthese sessions and said it helped them better understandthe Company’s direction and their roles in it. In addition,TM’s Group Corporate Communications (GCC) introduced‘ChillOutwithGCC’programmeasanotherplatformfortheManagementtoengagewithemployees,andshareimportantcorporatemessagesonabiggerscale.

In 2012, our Employee Engagement Index (EEI) or My1TMSurvey score rose to 90.0% based on the annual EmployeeEngagement Survey. This is 13.0% higher than the nationalaverage score. The score is also 15.0% higher than theGlobal Telco average and 5.0% higher than the Global HighPerformingCompaniesaverage.ThecategoriesinwhichTMimprovedthemostsince2011wereRecognition,StrongBeliefin Product and Service Quality, Organisation Change andSupport Service Environment. The My1TM Survey sampled9,526employees,ofwhom7,388(78.0%)werefrom11centralgroupfunctions,10divisionsand15locations.

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Tostrengthenourpositionasthepreferredemployeramongtheyoungergeneration,weheldourinauguralTMCareerandEducation Fair from 6 to 8 April 2012 at the TM ConventionCentre. The fair received overwhelming response of over18,726attendees,84.0%ofwhomwerebelow theageof28years.Duringthefair,over93,726resumeswerereceived,andover4,000interviewswereconducted.

Employee Benefits

TMoffersacompetitivecompensationpackagewithasalaryscheme tailored to reward high performers who createbusinessvaluefortheCompany.Wealsoofferawiderangeofbenefitstofull-timeemployeesthatmeettheirhealth,wealth,livingandcareerneeds.Theseincludecomprehensivemedicalcoverage; maternity, paternity, compassionate, pilgrimage,study and examination leave; as well as various allowancesand loan facilities. We also provide social and recreationalfacilities,andprofessionalcounsellingbyacertifiedcounsellorthroughtheEmployeeAssistanceProgramme(EAP).

In 2010, TM launched the Rewards Transformation initiativeaimedatencouragingahigh-performanceculture.The firstchangewastoincreasetheminimumwagefornon-executives.This was followed by an upgrading exercise to promote theacquisition of additional roles and knowledge. Finally, aPerformance-Linked Wage System (PLWS) was introduced.In July 2012, a new, market-competitive compensation plantiedtoperformancewasintroducedforexecutives,benefitting9,287employees.ThenextstepintheRewardsTransformationinitiativewillbetoprovideflexibilityandchoicetoemployeesinmanagingtheirbenefits.

Collective and Bargaining Agreements

TM enjoys a harmonious relationship with its four Uniongroupsthatrepresentnon-executivesintheCompany,namelytheNationalUnionofTelecommunicationsEmployees(NUTE),UnionofTelecomsEmployeesSarawak(UTES),SabahUnionofTelekomMalaysiaBerhadEmployees(SUTE)andSabahUnionofTelecommunicationsEmployees(SUTEN).TMiscommittedtosustainprofessionalrelationshipswiththeUnions,allowingtheGrouptoachieveitstargetof‘ZeroIndustrialDisputes’in2012.BothManagementandtheUnionsaredriventoresolveall issues amicably via discussion and mediation. As theCollectiveBargainingAgreementsfortheperiod2010to2012arecomingtotheirend,TMhasinitiatedaseriesofKick-OffSessionswithalltheUnionstodraftnewagreementstocomeineffectfrom2013to2015.

Occupational Safety, Health and Environment (OSHE)

TMplacesthehighestpriorityinmaintainingasafeworkingenvironment,notonlyforitsemployeesbutalsoforworkersof contractors serving the Group. TM is in full compliancewiththeOccupationalSafetyandHealthAct(OSHA)1994andits regulations. Contractors serving TM must certify theirworkersunderajointprogrammewiththeNationalInstituteofOccupationalSafetyandHealth(NIOSH)namelytheNIOSH-TM Safety Passport (NTMSP) programme. Till today, TM isthe only telco in Malaysia to enforce this customised OSHEinduction programme for contractors. An estimated 40,000contractorshavebeentrainedunderthisprogramme.

In 2012, there were 98 accidents, an increase of 38.1% from2011. At the same time, the incident rate (IR) of about 1.15accidentsper1,000employeeswasstillsignificantlybetterthanthenationalaverageIRof3.4injuriesper1,000workers(2009).WhileTMhasmaintaineditsrecordofzerofatalitiessince2010,therewerefourfatalaccidentsamongcontractorsin2012.Mostof the accidents were falls from height involving personnelworkingonladders,polesandroofs.

To ensure the number of incidences are minimised andeliminated altogether, a restructuring of the TM GroupOccupationalSafety,HealthandEnvironment(OSHE)SteeringCommitteeandStateOSHECommitteeswasdonein2012.Therestructuring created a direct link between site committeeswiththeSteeringCommitteeformoreeffectivecommunication.TheSteeringandStateCommitteesmeetquarterlyandcomplywith all OSHA 1994 and Occupational Safety & Health (OSH)CommitteeRegulations1996requirements.

Training and Professional Development

In order to maintain a high-performance culture, TM placesmuch emphasis on the continuous training and professionaldevelopmentof itsemployees.TheTMTrainingCentre(TMTC)isresponsibleforcustomisingtrainingprogrammescapableofmeetingmanyspecificneedstocontributetowardsthesuccessfulimplementationoftheGroup’sstrategicdirection.TMTCtrainedatotalof76,185participantsin2012.Onaverage,TMemployeescompleted46traininghoursperemployeein2012.

TM’s unique and motivational Onboarding Programme givesnew employees a head-start by aiding their integration intothe Group. The programme introduces new hires to theCompany’s Vision, Mission, values and standards. TM willlaunchane-LearningversionoftheOnboardingProgrammein 2013, featuring intensive coaching to further enhanceemployees’talentsandcapabilities.

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TM’s Technical Academy (TA) ensures TM’s technicalemployees are prepared to fully support the Group asit transforms into a key regional Information Exchange.Approximately56.0%ofalltrainingprovidedtoTMemployeesaredoneattheTechnicalAcademy.In2012,20,924employeeswent through high speed broadband (HSBB) and IP-relatedmodulesprovidedbyTA.

TheCustomerServiceAcademy(CSA)wasestablishedinAugust2011 to develop TM’s human capital capabilities and delivera Wow! Customer Experience. A key programme introducedwas SMILE, which seeks to enhance TM’s customer servicesatisfactionbytargetingfrontliners.In2012,3,756participantscompletedtheprogramme,almosttriplethenumberin2011.

TeamingWithPassion(TWP)wasintroducedin2009tocreatecorporate excellence via a strong leadership. TWP Phase 2commenced in 2011 to inspire greater customer-centricityand a performance-based culture. In 2012, a total of 3,667employeesattendedthisprogramme.

The success of TM’s training and professional developmentprogrammes depend on the effectiveness of the trainersor coaches. In addition, coaching allows for personaltransformation and career role transition. At TM, coachingsessions facilitate more personal and interactive learning,which promotes creativity for continuous long-termimprovement in line with the organisation’s aspirations. In2012,15newcoachesweretrainedtosupporttheprogramme.

Taking training and development to the next level, TMTCis currently deploying the Remote Virtual Learning (RVL)initiative to complement its Self-Learning approach. Self-Learning enables employees to perform online trainingmodulesontheirown,attheirowntimeandpace.WithRVL,trainerandtraineesarebrought together inavirtualonlinelearning environment where cutting-edge technologies likehighqualityweb-conferencingareutilisedtothefullest.Thesystem is being developed in three phases. The first phasewaslaunchedinthethirdquarterof2012.Theentiresystemisscheduledtobeavailablebythesecondquarterof2013.

Performance reviews and career development

In 2012, our Assessment Centre carried out a Career Pathexercisetorecognisequalifiednon-executiveswhoareeligibleforbetterpositions.Underthisexercise,1,494non-executiveswere upgraded while 348 were promoted. The centre alsoassessesthecompetenciesofexecutivesandtheirreadiness

forpromotion.Todate,2,106executivesandmanagershavetakentheLeadershipAssessment.

TMintroducedanonlineBehaviouralAssessmentforexecutivesin 2004, which measures behavioural competencies throughasetofquestions foreach job level.As theneedtoobservethe behavioural competencies increased, the assessmentwasappliedtomorestaff.Today,theBehaviouralAssessmentcovers all Group employees. In addition, the number ofFeedbackGiversexpandedbeyondemployeesandsupervisorsto include peers, subordinates and internal customers thusofferinga360°assessmentoftheemployee.

The Competency Index (CI) derived from the assessment iscomparedtotheCItargettoindicatetheemployee’sperformancegap, which in turn is used to determine the employee’strainingandcareerdevelopmentneeds.TheCIisalsousedbyManagement for an individual’s Key Performance Indicators(KPIs).In2012,theCItargetwasfixedat85.0%acrosstheGroup.

TM has a structured Fast Track Programme (FTP) to buildtheleadershipskillsandpotentialofidentifiedexecutives.Bytheendof2012, the24participantsof thisprogrammehadundergoneseveral jobrotationsandassignmentswithintheGroup.TalentEngagementProgrammeswerealsodeliveredto provide young talents the opportunity to engage withleaders.

Promoting Social Awareness & Integrity

TM believes strongly in cultivating an ethos of integrity andheightened social awareness in the workplace. Towards thisend,on20January2012welaunchedtheTMIntegrityPacttofurtherenhancetransparencytoreduceoreradicatecorruptionin the workplace. An Integrity Awareness Programme (IAP)wasalsoconductedwithintheGroupnationwide.ThisincludesimplementationoftheTMCodeofBusinessEthics(CBE)inthee-Learningplatform,signingoftheCorporateIntegrityPledge&Anti-CorruptionPrinciples,andbecominga‘RakanIntegriti’oftheMalaysianInstituteofIntegrity(IIM).

As part of our social awareness and integrity efforts,TM allocates resources to the TM Welfare Fund whichprovidesaidtoemployees intimesofneed.TheTMWelfareFund ismanagedbytheGroupHumanCapitalManagementtorespondtorequests fromvariousdepartments,TMclubsand non-profit organisations such as BAKIT, SemboyanPakar, BERKAT, Kelab TM, Toastmasters and Tiaranita.In 2012, RM9.0 million was allocated to the Welfare Fund.

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Since1December2012,employeescanapplyforwelfareaidthrough the online eClaim System. This function is to helpemployeesinneedofassistanceduetonaturaldisasters.ThefundisalsoextendedtoemployeesworkinginTMsubsidiaries.

Recognising the potential and realising that People withDisablities (PwD) would be more than capable of handlingcertain tasksespecially incallcentres,aprogrammecalledStep-Up (Strategic Transformation Enablement ProgrammetoUpskillProfessionalDevelopment)was launched inVADSfor PwDs. Receiving the same treatment like their normalcounterparts, the PwDs are now able to earn their livingby working in the call centres, which were upgraded to bedisabled-friendly. This added on to TM’s already diversifiedworkforce, addressing the PwDs with Respect and Careforbeingapartofourbig family.Asof2012,0.05%ofTM’s27,642employeesarePwDs,a0.01%increasefrom2011.ThisinitiativewasalsorecognisedthroughthehonourofreceivingtheSilverAwardfor‘BestCommunityProgramme’byContactCentreWorld.com

COMMUNITYFocusedonactivitiesrevolvingaroundeducationandnation-building, TM has made its mark in several key communityinitiativesaspartofitsCRefforts.

meettheneedsofthenation’sICTindustry.MMUhasanactiveR&Ddepartmentandmarketsinnovativeproductsdevelopedoncampusthrough itscommercialarm,UniteleMultimediaSdn Bhd (MMU Cnergy). All MMU students are required totakeentrepreneurshipsubjectsandaregivenopportunitiestoapplytheirknowledgewheneverpossible.

MMUhasproduced34,378graduatesandcurrentlyhas10,458studentsinitsMelakacampus,8,310initsCyberjayacampus,andanother363studentsinotherbranches.Ofitsstudents,2,767arestudentsfromtheoverseasfrom77countries.Overthelastseveralyears,morethan90.0%ofMMU’sgraduateshave secured employment within six months of completingtheirstudies.

MMCactsasacomplementtoMMUinprovidingopportunitiesforthosewhoprefertodeveloptheirvocationalskills,mainlyrelating to Multimedia and IT. Complementing the maincampus in Kuala Lumpur, MMC has regional campuses inPerak, Terengganu, Sabah and Sarawak. Together, the fivecampuseshaveatotalstudentpopulationof1,806.ThecollegeofferseightDiplomaprogrammesaccreditedbytheMalaysianQualificationAgency(MQA),namely:1. DiplomainTelecommunicationsEngineering2. DiplomainMobile&WirelessCommunications3. DiplomainMultimediaTechnology4. DiplomainBusinessComputing5. DiplomainMarketingwithMultimedia6. DiplomainManagementwithMultimedia7. DiplomainAccountingwithMultimedia8. DiplomainCreativeNewMedia

Mobile & Wireless Communication, Creative New Media,Multimedia Technology, Multimedia (Business Computing),Marketing with Multimedia, Management with Multimedia,andAccountingwithMultimedia.

MMC held its 16th Convocation on 10 October 2012, duringwhich 492 students graduated. The total number of MMCgraduatesfrom1997is6,018.

YayasanTM

TM’sfoundation,YayasanTM(YTM)hasbeenapillarofTM’seducational efforts by providing scholarships and fundingunder the Scholars Development Programme, in additionto donating to worthy causes and supporting the Group’sCorporateSocialResponsibility(CSR)Programmes.

Holistic education initiativesMultimediaUniversity&MultimediaCollege

TM has been supporting the national agenda to nurture aknowledge-rich nation through two institutions of higherlearning – Multimedia University (MMU) and MultimediaCollege(MMC).MMU,setup16yearsagoasMalaysia’sfirstprivate university, creates dynamic and capable talents to

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Sinceitsestablishmentin1994untilDecember2012,YTMhaddisbursedatotalofRM435.6millioninscholarshipfundsandthe Scholars Development Programme, benefitting 13,388students. On 31 May 2012, 84 outstanding students wereawarded YTM scholarships, bringing the total number ofcurrentYTMscholarsto516.

TheScholarsDevelopmentProgrammedevelopsthestudents’soft skills. In 2012, nine programmes targeting intellectualdevelopment,engagement,EQ/leadershipassessment,teambuilding, motivation, counseling and career decisions wereheldfor719scholars.

SchoolAdoptionProgramme

TMisactivelyinvolvedinenablingunderprivilegedchildrentoenjoyameaningfuleducationprocessvia itsSchoolAdoptionProgramme.WorkingwithvariouspartiessuchastheMinistryof Information, Communications and Culture (KPKK) andPINTARFoundation,TMhasadoptedselectedschoolsinruralareasnationwide,engagingwithnotonlytheschool,butalsothe surrounding community in supporting the developmentof the children. Allocating each school RM200,000 for aperiodofthreeyears,thefundsareusedformotivationalandteambuilding programmes in addition to educational andacademicsupport.Financialsupportisalsogiventocapabilityandcapacity-building,managingsocietalissues,andupgradingICTfacilitiesandresources.

Since the programme started in 2003 until March 2013, TMhas12adoptedschoolsunder itswing.Of these,sixschoolssuccessfullygraduated from theprogramme.Fouradditionalschoolswerethenadoptedin2011-2012,aswellasanothertwoin2013.Oneofthelatestadoptedschools,SekolahKebangsaanPendidikanKhasPekanTuaraninSabahisaschoolforvisuallyimpairedstudents,makingTMthefirstGLCtosupportaspecialneedsschoolunderPINTARprogramme.Anothertwoadopted

schoolsnamelySekolahMenengahKebangsaanChenderiang,Perak, and Sekolah Menengah Kebangsaan Orang Kaya HajiKuala Lipis, Pahang, are with sizeable Orang Asli studentpopulations, in line with our objective to include minoritygroupsandtheconceptof‘inclusiveness’inourCRendeavours.

Convinced of the need to promote safety awareness amongchildren, TM introduced a special safety programme in 2012forstudentsattwoofitsPINTARschools–SekolahMenengahKebangsaan Chenderiang and Sekolah Kebangsaan Tembak,Kuala Ketil, in Kedah. The programme focuses on self-preservationbybeingconsciousofone’ssurroundings.Parents,meanwhile,wereenlightenedonriskyactivitiesthattheyshouldwarntheirchildrenagainst.Followingpositiveresponsesfromtheparticipants,TMwillbeextending theprogramme to therestofitsPINTARschoolsnationwidein2013.

The school adoption programme ran in collaboration withKPKKwhichstartedin2009cametoanendin2012.However,theschools involved–SekolahKebangsaanTeriang,SekolahMenengahKebangsaanPakanandSekolahMenengahRendahAgama Repah – continue to attract public and governmentattention,asreflectedintheprovisionofbetterschoolfacilitiesandtheupgradeoftheirinfrastructure.

Nation-Building and other community initiatives

TM has always contributed to nation-building by providingtelecommunications services to the people. In recent years,ouroutreachprogrammeshaveextendedtoincludesupporttomarginalisedcommunitiesaswell.

ProgramSejahtera

Program Sejahtera was launched in 2009 as a platform forGLCstocontributecollectively,toalleviatepovertyandprovideasustainablelivelihoodforthelessfortunate.Underthefirstphaseof thisprogramme,TMadoptedthreesinglemotherswhoweretrainedtobeabletosustainabetterqualityoflife.

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In 2012, TM launched into the second phase of ProgramSejahtera in collaboration with Yayasan Sejahtera to extendtheir existing outreach initiatives in Kelantan. Three singlemothers were selected, namely Hasnah Che Ismail, NoorRizanMatAminandSharifahNorSuzanaSyedAbdullah,allofthemwithmorethanthreechildrenandmonthlyincomesoflessthanRM500.Twoofthesesinglemothersenrolledinthe‘1Family 1Enterprise’ programme under Yayasan Pendidikan dan Vokasional Wanita Malaysia (YPVWM) and were given asewingmachineeachand taughtsmallbusinessenterpriseskills.TMcontributedanewfreezertothethirdsinglemotherwho had opened a mini market with a loan from AmanahIkhtiar.The freezerallowedthesinglemother tosell frozenfoodproductswherepreviouslyshecouldonlyselldrygoods.

In addition, TM donated a desktop and printer completewith Streamyx broadband connection to each of the singlemothers. A son of one of the single mothers scored 8As inhisSijilPelajaranMalaysia(SPM)examinationandwasgivenafullscholarshiptoMMU.Allthreesinglemothersarenowearningmore incomeasaresultof theirnewskillsandaidfromTManditspartners.

In November 2012, another two single mothers wereidentified to be part of the same programme to extend thebenefittomorequalifiedfamilies.AllfivesinglemothersandtheirfamiliesunderProgramSejahterainKelantanwillthencontinuetobeequippedwiththenecessaryaidinimprovingtheirqualityofliving.

Othercommunityinitiatives

TMhasalsocontributedtoseveralbeneficiariesandcausesas part of its comprehensive outreach programme. Theseorganisations include the Society for The Blind Malaysia,National Cancer Society Malaysia, and Malaysian ArmedForces. TM has also channeled RM50,000 to Palestinians inGazaviatheTabung Kemanusiaan Palestin organisedbyMedia

Primawithrespecttohumanrights.Meanwhile,TM’sDisasterRecoveryCallCentre(DRCC)continuestoensuretimelyandeffectivedeliveryofsupporttoaffectedcommunitiesresultingin fast and effective communications for speedy disasterrecovery.

Supporting government initiatives

TM is a steadfast supporter of the government’s broadbandaspirations. Streamyx, TM’s broadband offering for themasses,isprimarilyresponsibleforthecountryattainingtheNationalBroadbandInitiative(NB1)targetof50.0%householdpenetrationby2010.Inthesameyear,TMlaunchedcountry’sfirst high speed broadband (HSSB) service branded UniFi.As of end 2012, TM had achieved its target of 1.377 millionpremisespassed,onschedule.

Inaddition tobeing thebroadbandchampion for thenation,weseeourselvesasthegovernment’strustedICTpartner.In2012, TM successfully secured three major initiatives undertheGovernmentICTinfrastructureconsolidationprogramme.These are: the expansion of the government intranet andInternetservice(EG*Net),thedevelopmentofthegovernmente-mailandunifiedcommunicationservice (1GovUC)andthegovernment call centre (1MOCC). These projects ultimatelyserve and benefit the rakyat immensely and we are proudto be a part a key contributor to the positive progress andsuccessofthenation.

We also continue to support the Government’s vision ofachievinguniversalaccess,universalcoverageanduniversalservicethroughapublic-privatepartnership framework.TMhas established 284 Community Broadband Centres (CBCs)or comonly known as Pusat Internet 1Malaysia (PI1M) and98 Community Broadband Libraries (CBL) via the UniversalService Provision (USP) fund. Another project utilising thesamefundisKampung Tanpa Wayar,whereTMisresponsibleforsettingupatotalof1,622Kampung Tanpa Wayarandoutofthose,960werecompleted.

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TM’snext-generationnetwork(NGN)thatwillbereplacingthelegacyPublicSwitchedTelephoneNetwork (PSTN)network,forexample,ismoreenergyefficientandutiliseslessenergywhile dissipating less heat. These efficiencies contribute tothereductionofCO2emissionsoverall.Asofend2012aftertwo years into the migration, 10.0% of the PSTN switcheswithinTMExchangeshavebeenmigrated toNGN, reducingourCO2emissionsbyabout6kT.

Beyond this, TM employees are actively encouraged toinitiateandparticipate inenvironmentalconservationat theworkplace.AprimeexampleofthisistheBumiKucampaignlaunched in October 2009. In 2012, a BumiKu Camp wasorganisedincollaborationwiththeMalaysianNatureSociety(MNS)atSedimRainforestResortinKedahfrom5to7October.The120participantsofthecampgainedanewappreciationofnaturethroughjungletrekking,birdwatchingandconductingstudiesonfloraandfaunainthearea.Ahighlandecologytalkwasalsopresentedat thecamp,amongotherthings.OtheractivitiesorganisedundertheBumiKubannerincludedafunrun toraiseenvironmentalawareness;Gotong-royong 1TM –in which employees across the nation connected with localcommunities and organised clean-up activities within thecommunity;andtheBumiKuGreenWeekorganisedfrom16to24Aprilwhereemployeeswereencouragedtoplanttrees.

CableTheftPreventionCampaign

InsupportingMalaysia’s initiative toreducecrimeunder theNational Key Results Area (NKRA), TM has stepped forwardandlaunchedanationwidecampaigntoreduceandultimatelypreventcabletheft.InitiativesundertheCableTheftPreventioncampaign include forging various collaborations throughengagement activities such as briefings to Polis DiRajaMalaysia (PDRM) and reward schemes for the successfulcaptureofcablethieves.Alsokeytothecampaign’ssuccessfulimplementationare relationshipbuildingactivitieswith localcommunitiesinadditiontoregularpatrolsbyTM’sownsecurityteam.Supplementinggroundpatrols,TMhasalsosuccessfullyinstalledthei-Watchsystem.Theearlyalertsystemprovidessecuritypersonnelaheads-uponillegalcablecuts.

ENVIRONMENTOver the years, TM has made more concerted efforts toprotect the environment and minimise the environmentalimpact of its operations. In 2012, three buildings – TMComplex/InternetDataCentre(IDC)Cyberjaya,TMComplex/ExchangeAlorSetarandTMBukitTimbalan–wereawardedthe certification for Environment Management System,namely ISO14001:2004 (EMS) fromSIRIMQASInternationalSdn Bhd, following Menara TM that was awarded the samecertification in 2008. One of the aspects being monitored isenergyconsumption inourbuildingsandthroughtheusageofair-conditionersinourcabinsandexchanges.Forexample,theelectricityforthechilledwaterpumpingsystematMenaraTMhasbeenreducedby20.5%from662,849kWhin2011to526,711kWhin2012;whiletemperatureadjustments in383selected cabins nationwide recorded an estimated annualsavingsfromelectricityofRM1,378,800.00for2012.

Supplementing these conservation efforts, TM alsoimplementedtheCarbonManagementPlanin2012tocloselymonitorandreducetheGroup’scarbonfootprint.

Apositiveboost inourgreen initiativescomesfromthefactthattechnologicaladvancestendtobeenvironment-friendly.

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fiNaNCialstatEMENts

236 Statement of Responsibilityby Directors

237 Directors’ Report242 Income Statements243 Statements of

Comprehensive Income244 Statements of Financial

Position246 Consolidated Statement of

Changes in Equity248 Company Statement of

Changes in Equity250 Statements of Cash Flows251 Notes to the Financial

Statements380 Supplementary Information381 Statement by Directors381 Statutory Declaration382 Independent Auditors’

Report

Statement of Responsibility by Directors

InrespectofthepreparationoftheAnnualAuditedFinancialStatements

TheDirectorsarerequiredbytheCompaniesAct,1965(Act)topreparefinancialstatementsforeachyearinaccordancewithMalaysianFinancialReportingStandards(MFRS),InternationalFinancialReportingStandardsandtherequirementsoftheActandgiveatrueandfairviewofthestateofaffairsoftheGroupandtheCompanyattheendoftheyearandoftheresultsandcashflowsoftheGroupandtheCompanyfortheyear.

Inpreparingthefinancialstatements,theDirectorshave:

• adoptedappropriateandrelevantaccountingpoliciesandappliedthemconsistently;• madejudgmentsandestimatesthatarereasonableandprudent;• ensuredthatallapplicableapprovedaccountingstandardshavebeenfollowed;and• preparedthefinancialstatementsonagoingconcernbasisastheDirectorshaveareasonableexpectation,havingmade

enquiries,thattheGroupandtheCompanyhaveadequateresourcestocontinueinoperationalexistencefortheforeseeablefuture.

TheDirectorshavetheresponsibilitytoensurethattheGroupandtheCompanykeepaccountingrecordswhichdisclosewithreasonable accuracy the financial position of the Group and the Company, and which enable them to ensure the financialstatementscomplywiththeAct.

TheDirectorshavetheoverallresponsibilitiestotakesuchstepsasarereasonablyopentothemtosafeguardtheassetsoftheGroupandforestablishmentandimplementationofappropriateaccountingandinternalcontrolsystemsforthepreventionanddetectionoffraudandotherirregularities.

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Financial Statementswww.tm.com.my


Directors’ Reportforthefinancialyearended31December2012

TheDirectorshavepleasureinsubmittingtheirannualreportandtheauditedfinancialstatementsoftheGroupandtheCompanyforthefinancialyearended31December2012.

PRINCIPAL ACTIVITIESTheprincipalactivitiesoftheCompanyaretheestablishment,maintenanceandprovisionoftelecommunicationsandrelatedservices.Theprincipalactivitiesofsubsidiariesaresetout innote51 to thefinancialstatements.TherewasnosignificantchangeintheprincipalactivitiesoftheGroupandtheCompanyduringthefinancialyear.

RESULTSTheresultsoftheoperationsoftheGroupandtheCompanyforthefinancialyearwereasfollows:

the GroupRM Million

the CompanyRM Million

Profitforthefinancialyearattributableto:–equityholdersoftheCompany 1,263.7 1,081.1–non-controllinginterests 42.2 –

Profitforthefinancialyear 1,305.9 1,081.1

IntheopinionoftheDirectors,theresultsoftheoperationsoftheGroupandtheCompanyduringthefinancialyearwerenotsubstantiallyaffectedbyanyitem,transactionoreventofamaterialandunusualnature.

DIVIDENDSSincetheendofthepreviousfinancialyear,dividendspaid,declaredorproposedonordinarysharesbytheCompanywereasfollows:

the CompanyRM Million

(a) Inrespectofthefinancialyearended31December2011,afinalsingle-tierdividendof9.8senpersharewaspaidon8June2012 350.6

(b) Inrespectofthefinancialyearended31December2012,aninterimsingle-tierdividendof9.8senpersharewaspaidon28September2012 350.6

Inrespectofthefinancialyearended31December2012,theDirectorsnowrecommendafinalsingle-tierdividendof12.2senpersharefortheshareholders’approvalattheforthcomingTwenty-EighthAnnualGeneralMeeting(28thAGM)oftheCompany.

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Financial Statements www.tm.com.my


SHARE CAPITALOn24February2012,theCompanyannouncedaproposedcapitalrepaymenttoitsshareholdersofapproximatelyRM1,073.2millionorRM0.30foreachordinaryshareofRM1.00eachintheCompany(CapitalRepayment).

TheproposalwasapprovedbyitsshareholdersatanExtraordinaryGeneralMeeting(EGM)heldon8May2012.TofacilitatetheimplementationoftheCapitalRepayment,theCompanyhad,attheEGM,amendedtheMemorandumandArticlesofAssociationtoreflectthereductionintheparvalueofeachordinarysharefromRM1.00toRM0.70pershare.

Consequently,on13July2012theHighCourtofMalayahadgrantedanorderconfirmingtheproposedCapitalRepaymenttobecarriedoutbasedonthespecialresolutionapprovedbytheshareholdersattheEGM.TheCapitalRepaymentwasimplementedbywayofareductionoftheissuedandpaid-upsharecapitaloftheCompanyunderSection64oftheCompaniesAct,1965,wherebyon1August2012,theparvalueofeachordinaryshareoftheCompanywasreducedfromRM1.00toRM0.70pershare.ThetotalnumberofordinarysharesoftheCompanyinissueremainedunchangedat3,577.4millionshares.

On16July2012, theCompanyhadannounced theEntitlementDateof31July2012 for theCapitalRepayment.Thecapitalrepaymentwascompleteduponcashpaymenttoeligibleshareholderson15August2012.

ISLAMIC COMMERCIAL PAPERS AND MEDIUM TERM NOTESOn5April2011,theCompanyreceivedapprovalfromtheSecuritiesCommissionMalaysiafortheestablishmentofanIslamicCommercialPapers(ICP)programmeandanIslamicMediumTermNotes(IMTN)programmewithacombinedlimitofuptoRM2.0billioninnominalvalue.Theseprogrammeshaverespectivetenuresof7and15yearsfromthedateoffirstissuance.TheICPshallhavetenureofnotmorethan12monthswhilsttheIMTNbetween1to15yearsprovidedthattherespectivedebtsecuritiesmaturebeforetheexpiryoftherespectiveprogrammes.TheproceedsfromtheissuanceoftheICPand/orIMTNwereusedbytheCompanytomeetitscapitalexpenditurerequirement.

DetailsoftheICPandIMTNissuedduringthefinancialyearareasfollows:

Debt securities Date of issue Nominal Value Maturity Date

ICP 13March2012 RM150.0million 15May2012

ICP 31July2012 RM80.0million 10September2012

ICP 10September2012 RM150.0million 10October2012*

ICP 3October2012 RM150.0million 21November2012

ICP 19November2012 RM100.0million 19December2012

IMTN 15May2012 RM250.0million 13May2022

IMTN 19December2012 RM300.0million 19December2022

* TheICPwassubsequentlyrolledovertomatureon21November2012

AlloftheICPhavebeenfullyrepaidontheirmaturitydates.

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MOVEMENTS ON RESERVES AND PROVISIONSAllmaterialtransferstoorfromreservesorprovisionsduringthefinancialyearhavebeendisclosedinthefinancialstatements.

STATUTORY INFORMATION ON THE FINANCIAL STATEMENTSBeforethefinancialstatementsoftheGroupandtheCompanywereprepared,theDirectorstookreasonablestepsto:

(a) ascertainthatactionshadbeentakeninrelationtothewritingoffofbaddebtsandthemakingofallowancefordoubtfuldebtsandsatisfiedthemselvesthatallknownbaddebtshadbeenwrittenoffandthatadequateallowancehadbeenmadefordoubtfuldebts;and

(b) ensurethatanycurrentassetswhichwereunlikelytoberealisedattheirbookvalueintheordinarycourseofbusinesshadbeenwrittendowntotheirexpectedrealisablevalues.

Atthedateofthisreport,theDirectorsarenotawareofanycircumstanceswhich:

(a) wouldrendertheamountswrittenoffforbaddebtsortheamountofallowancefordoubtfuldebtsinthefinancialstatementsoftheGroupandtheCompanyinadequatetoanysubstantialextentorthevaluesattributedtocurrentassetsinthefinancialstatementsoftheGroupandtheCompanymisleading;and

(b) havearisenwhichrenderadherencetotheexistingmethodofvaluationofassetsorliabilitiesoftheGroupandtheCompanymisleadingorinappropriate.

Intheintervalbetweentheendofthefinancialyearandthedateofthisreport:

(a) noitems,transactionsorothereventsofmaterialandunusualnaturehasarisenwhich,intheopinionoftheDirectors,wouldsubstantiallyaffecttheresultsoftheoperationsoftheGroupandtheCompanyforthefinancialyearinwhichthisreportismade;and

(b) nochargehasarisenontheassetsofanycompanyintheGroupwhichsecurestheliabilityofanyotherpersonnorhasanycontingentliabilityariseninanycompanyintheGroup.

NocontingentorotherliabilityofanycompanyintheGrouphasbecomeenforceableorislikelytobecomeenforceablewithintheperiodof12monthsaftertheendofthefinancialyearwhich,intheopinionoftheDirectors,willormayaffecttheabilityoftheGrouportheCompanytomeettheirobligationswhentheyfalldue.

Atthedateofthisreport,theDirectorsarenotawareofanycircumstancesnototherwisedealtwithinthisreportorthefinancialstatementsoftheGroupandtheCompany,whichwouldrenderanyamountstatedinthefinancialstatementsmisleading.

SIGNIFICANT SUBSEqUENT EVENTThesignificanteventsubsequenttotheendofthefinancialyearisasdisclosedinnote49tothefinancialstatements.

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DIRECTORSTheDirectorsinofficesincethedateofthelastreportareasfollows:

Directors Alternate Directors

Dato’SriDrHalimShafieDato’SriZamzamzairaniMohdIsaDatukBazlanOsmanDato’MatNoorNawi EshahMeorSuleimanTunkuDato’MahmoodFawzyTunkuMuhiyiddin NikRizalKamilTanSriNikIbrahimKamil

(Appointed on 29 November 2012)DatukZalekhaHassanDato’DanapalanT.P.VinggrasalamYBDatukNurJazlanTanSriMohamedDato’IrAbdulRahimAbuBakarQuahPohKeatIbrahimMarsidiDavideGiacomoBenello@DavidBenello

Dato’ Danapalan T.P. Vinggrasalam who will attain the age of 70 years on 20 March 2013 shall retire at the forthcoming28thAGMoftheCompanyinaccordancewithSection129(2)oftheCompaniesAct,1965,andbeingeligible,offerhimselfforre-appointmentasDirectoroftheCompany.

InaccordancewithArticle103oftheCompany’sArticlesofAssociation,thefollowingDirectorsshallretirebyrotationfromtheBoardattheforthcoming28thAGMoftheCompanyandbeingeligible,offerthemselvesforre-election:

(i) DatukBazlanOsman(ii) TunkuDato’MahmoodFawzyTunkuMuhiyiddin(iii) Dato’IrAbdulRahimAbuBakar(iv) IbrahimMarsidi

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DIRECTORS’ INTEREST InaccordancewiththeRegisterofDirectors’Shareholdings,theDirectorswhoheldofficeattheendofthefinancialyearandhaveinterestinsharesintheCompanyareasfollows:

Number of ordinary shares of RM0.70* each

Interest in the CompanyBalance at

1.1.2012 Bought SoldBalance at 31.12.2012

Dato’SriDrHalimShafie 8,000** - - 8,000**

Dato’SriZamzamzairaniMohdIsa 9,000*** - - 9,000***

DatukBazlanOsman 2,000 - - 2,000

Note:* TheparvalueoftheordinarysharesoftheCompanywasreducedfromRM1.00toRM0.70eacheffective1August2012

pursuanttothecapitalrepayment(note13(d)tothefinancialstatements).** DeemedinterestinsharesoftheCompanyheldbyspouse*** Includingdeemedinterestin4,000sharesheldbyspouse

In accordance with the Register of Directors’ Shareholdings, none of the other Directors who held office at the end of thefinancialyearhasanydirectorindirectinterestsinthesharesintheCompanyanditsrelatedcorporationsduringthefinancialyear.

DIRECTORS’ BENEFITSSincetheendofthepreviousfinancialyear,noneoftheDirectorshasreceivedorbecomeentitledtoreceiveanybenefit(exceptfortheDirectors’fees,remunerationandotheremolumentsasdisclosedinnote6(b)tothefinancialstatements)byreasonofacontractmadebytheCompanyorarelatedcorporationwiththeDirectororwithafirmofwhichheisamemberorwithacompany inwhichhehasasubstantialfinancial interestandanybenefit thatmaydeemtohavebeenreceivedbycertainDirectors.

NeitherduringnorattheendofthefinancialyearwastheCompanyoranyofitsrelatedcorporations,apartytoanyarrangementwiththeobject(s)ofenablingtheDirectorstoacquirebenefitsbymeansoftheacquisitionofsharesin,ordebenturesoftheCompanyoranyotherbodycorporate.

AUDITORSTheauditors,PricewaterhouseCoopers,haveexpressedtheirwillingnesstocontinueinoffice.

InaccordancewitharesolutionoftheBoardofDirectorsdated27February2013.

DATO’ SRI DR HALIM SHAFIE DATO’ SRI ZAMZAMZAIRANI MOHD ISADirector/Chairman Managing Director/Group Chief Executive Officer

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Income Statementsforthefinancialyearended31December2012

The Group The Company

All amounts are in million unlessotherwise stated Note

2012RM

2011RM

2012RM

2011RM

OPERATINGREVENUE 5 9,993.5 9,150.7 8,845.6 8,176.5OPERATINGCOSTS–depreciation,impairmentandamortisation 6(a) (2,044.7) (2,128.0) (1,847.1) (1,950.8)–otheroperatingcosts 6(b) (6,927.3) (6,185.2) (6,383.5) (5,805.3)OTHEROPERATINGINCOME(net) 7 165.4 120.9 292.0 262.7OTHERGAINS(net) 8 0.3 286.5 0.3 3.0

OPERATINGPROFITBEFOREFINANCECOST 1,187.2 1,244.9 907.3 686.1

FINANCEINCOME 139.6 133.0 132.7 121.4FINANCECOST (331.5) (318.2) (340.3) (325.0)FOREIGNEXCHANGEGAIN/(LOSS)ONBORROWINGS 73.4 (58.6) 73.4 (58.6)

NETFINANCECOST 9 (118.5) (243.8) (134.2) (262.2)ASSOCIATES–shareofresults(netoftax) 26 0.9 0.1 – –

PROFITBEFORETAXATIONANDZAKAT 1,069.6 1,001.2 773.1 423.9TAXATIONANDZAKAT 10 236.3 235.9 308.0 287.3

PROFITFORTHEFINANCIALYEAR 1,305.9 1,237.1 1,081.1 711.2

ATTRIBUTABLETO:–equityholdersoftheCompany 1,263.7 1,191.0 1,081.1 711.2–non-controllinginterests 42.2 46.1 – –

PROFITFORTHEFINANCIALYEAR 1,305.9 1,237.1 1,081.1 711.2

EARNINGSPERSHARE(sen)–basic/diluted 11 35.3 33.3

TheaboveIncomeStatementsaretobereadinconjunctionwiththeNotestotheFinancialStatementsonpages251to379.

IndependentAuditors’Report–Pages382to383.

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Statements of Comprehensive Incomeforthefinancialyearended31December2012



2012RM

2011RM

2012RM

2011RM

PROFITFORTHEFINANCIALYEAR 1,305.9 1,237.1 1,081.1 711.2OTHERCOMPREHENSIVEINCOME

Itemsthatmaybereclassifiedsubsequentlytoincomestatement:

–(decrease)/increaseinfairvalueofavailable-for-sale investments 27 (5.3) 26.8 (5.3) (5.1)–(decrease)/increaseinfairvalueofavailable-for-sale receivables 28(a) (1.1) 0.3 (1.1) 0.3–reclassificationadjustmentsrelatingtoavailable-forsaleinvestmentsdisposed 8 (3.3) (287.2) (3.3) (3.7)–cashflowhedge –(decrease)/increaseinfairvalueofcashflowhedge 18 (34.9) 35.8 (34.9) 35.8 –reclassificationtoforeignexchangegain/(loss) 9 29.7 (3.7) 29.7 (3.7)–currencytranslationdifferences–subsidiaries (3.6) 1.1 – –

Othercomprehensive(loss)/incomeforthefinancialyear (18.5) (226.9) (14.9) 23.6

TOTALCOMPREHENSIVEINCOMEFORTHEFINANCIALYEAR 1,287.4 1,010.2 1,066.2 734.8

ATTRIBUTABLETO:–equityholdersoftheCompany 1,245.2 964.1 1,066.2 734.8–non-controllinginterests 42.2 46.1 – –

TOTALCOMPREHENSIVEINCOMEFORTHEFINANCIALYEAR 1,287.4 1,010.2 1,066.2 734.8

TheaboveStatementsofComprehensiveIncomearetobereadinconjunctionwiththeNotestotheFinancialStatementsonpages251to379.


243



Statements of Financial Positionasat31December2012


All amounts are in million unless otherwise stated Note

31.12.2012RM

31.12.2011RM

1.1.2011RM

31.12.2012RM

31.12.2011RM

1.1.2011RM

SHARECAPITAL 13 2,504.2 3,577.4 3,568.1 2,504.2 3,577.4 3,568.1SHAREPREMIUM 43.2 43.2 1,055.1 43.2 43.2 1,055.1OTHERRESERVES 14 157.2 175.7 366.8 161.1 176.0 316.8RETAINEDPROFITS 15 4,190.2 3,627.7 3,174.6 3,040.3 2,660.4 2,173.3

TOTALCAPITALANDRESERVESATTRIBUTABLETOEQUITYHOLDERSOFTHECOMPANY 6,894.8 7,424.0 8,164.6 5,748.8 6,457.0 7,113.3

NON-CONTROLLINGINTERESTS 165.2 162.9 150.8 – – –

TOTALEQUITY 7,060.0 7,586.9 8,315.4 5,748.8 6,457.0 7,113.3

Borrowings 16 5,130.2 6,402.7 5,506.0 3,433.1 4,928.5 4,069.0Payabletoasubsidiary 17 – – – 1,697.1 1,474.2 1,434.0Derivativefinancial

instruments 18 51.5 18.9 28.0 51.5 18.9 28.0Deferredtaxliabilities 19 1,202.6 1,541.8 1,646.4 1,076.7 1,438.8 1,495.6Deferredincome 20 2,129.4 2,072.7 1,432.1 2,129.4 2,072.7 1,432.1

DEFERREDANDNON-CURRENTLIABILITIES 8,513.7 10,036.1 8,612.5 8,387.8 9,933.1 8,458.7

15,573.7 17,623.0 16,927.9 14,136.6 16,390.1 15,572.0

Property,plantandequipment 21 14,637.6 14,121.7 13,620.8 12,806.8 12,475.6 11,985.8

Investmentproperty 22 5.6 – – 119.1 121.3 119.6Intangibleassets 23 322.1 320.9 312.3 – – –Subsidiaries 24 – – – 1,265.7 1,346.7 1,623.4Loansandadvancesto

subsidiaries 25 – – – 260.4 219.7 236.7Associates 26 1.5 0.6 0.5 – – –Available-for-saleinvestments 27 98.7 104.8 114.6 98.6 104.7 114.6Available-for-salereceivables 28(a) 7.6 11.1 14.9 7.6 11.1 14.9Othernon-current

receivables 28(b) 252.3 199.5 89.4 214.2 199.5 89.4Derivativefinancial

instruments 18 43.1 66.2 3.6 43.1 66.2 3.6Deferredtaxassets 19 18.6 21.7 86.7 – – –

NON-CURRENTASSETS 15,387.1 14,846.5 14,242.8 14,815.5 14,544.8 14,188.0

244






31.12.2012RM

31.12.2011RM

1.1.2011RM

31.12.2012RM

31.12.2011RM

1.1.2011RM

Inventories 29 235.3 325.3 281.4 126.3 140.3 103.8Non-currentassetsheldfor

sale 30 8.0 – – 8.0 – –Customeracquisitioncosts 31 100.1 106.1 87.1 100.1 106.1 87.1Tradeandotherreceivables 32 2,207.0 2,323.2 2,628.3 1,853.6 2,159.0 2,464.0Derivativefinancial

instruments 18 2.6 – – 2.6 – –Available-for-sale

investments 27 500.6 418.1 838.1 500.6 418.1 356.2Financialassetsatfairvalue

throughprofitorloss 33 16.5 20.1 21.5 16.5 20.1 21.5Cashandbankbalances 34 3,738.7 4,213.0 3,488.5 3,241.6 3,729.0 3,077.7

CURRENTASSETS 6,808.8 7,405.8 7,344.9 5,849.3 6,572.6 6,110.3

Tradeandotherpayables 35 3,545.5 3,552.1 3,639.2 3,476.5 3,670.5 3,725.4Customerdeposits 36 518.2 544.5 580.5 517.8 543.8 580.1Advancerentalbillings 423.6 443.1 370.3 417.2 427.3 349.9Borrowings 16 2,010.2 7.7 26.0 2,007.2 4.7 4.6Taxationandzakat 124.7 81.9 43.8 109.5 81.0 66.3

CURRENTLIABILITIES 6,622.2 4,629.3 4,659.8 6,528.2 4,727.3 4,726.3

NETCURRENTASSETS/(LIABILITIES) 186.6 2,776.5 2,685.1 (678.9) 1,845.3 1,384.0

15,573.7 17,623.0 16,927.9 14,136.6 16,390.1 15,572.0

TheaboveStatementsofFinancialPositionaretobereadinconjunctionwiththeNotestotheFinancialStatementsonpages251to379.


245



Consolidated Statement of Changes in Equity

forthefinancialyearended31December2012

Attributable to equity holders of the Company

Issued and FullyPaid of RM0.70

each (2011: RM1.00 each)**Special Share*/

Ordinary Shares


ShareCapital

RM

SharePremium

RM

FairValue

ReservesRM

HedgingReserve

RM

CapitalRedemption

ReserveRM

CurrencyTranslationDifferences

RM

RetainedProfits

RM

Non-controlling

InterestsRM

TotalEquity

RM

At1January2012 3,577.4 43.2 72.3 32.1 71.6 (0.3) 3,627.7 162.9 7,586.9

Profitforthefinancialyear – – – – – – 1,263.7 42.2 1,305.9 Othercomprehensiveincome

Items that may be reclassified subsequently toincomestatement:

–decreaseinfairvalueofavailable-for-saleinvestments 27 – – (5.3) – – – – – (5.3)–decreaseinfairvalueofavailable-for-salereceivables 28(a) – – (1.1) – – – – – (1.1)–reclassificationadjustmentsrelatingtoavailable-for-saleinvestmentsdisposed 8 – – (3.3) – – – – – (3.3)–cashflowhedge

–decreaseinfairvalueofcashflowhedge 18 – – – (34.9) – – – – (34.9)–reclassificationtoforeignexchangegain 9 – – – 29.7 – – – – 29.7

–currencytranslationdifferences–subsidiaries – – – – – (3.6) – – (3.6)Totalcomprehensive(loss)/incomeforthe

financialyear – – (9.7) (5.2) – (3.6) 1,263.7 42.2 1,287.4

Transactionswithowners:Capitalrepayment** 13(d) (1,073.2) – – – – – – – (1,073.2)Capitalreturntonon-controllingintereston

windingupofasubsidiary – – – – – – – (0.6) (0.6)Finaldividendpaidforthefinancialyearended

31December2011 12 – – – – – – (350.6) – (350.6)Interimdividendpaidforthefinancialyearended

31December2012 12 – – – – – – (350.6) – (350.6)Dividendspaidtonon-controllinginterests – – – – – – – (39.3) (39.3)

Totaltransactionswithowners (1,073.2) – – – – – (701.2) (39.9) (1,814.3)

At 31 December 2012 2,504.2 43.2 62.6 26.9 71.6 (3.9) 4,190.2 165.2 7,060.0

246




Attributable to equity holders of the Company

Issued and FullyPaid of RM0.70

each (2011: RM1.00 each)**Special Share*/

Ordinary Shares


ShareCapital

RM

SharePremium

RM

FairValue

ReservesRM

HedgingReserve

RM

CapitalRedemption

ReserveRM

CurrencyTranslationDifferences

RM

RetainedProfits

RM

Non-controlling

InterestsRM

TotalEquity

RM

At1January2011Aspreviouslyreported 3,568.1 1,055.1 332.4 – 35.8 (1.4) 2,719.4 150.8 7,860.2AdjustmentsarisingfromthetransitiontoMFRS 50(a) – – – – – – 508.7 – 508.7Adjustmentstoprioryears 50(b)(ii) – – – – – – (53.5) – (53.5)

At1January2011,asrestated 3,568.1 1,055.1 332.4 – 35.8 (1.4) 3,174.6 150.8 8,315.4

Profitforthefinancialyear – – – – – – 1,191.0 46.1 1,237.1Othercomprehensiveincome

Items that may be reclassified subsequently toincomestatement:

–increaseinfairvalueofavailable-for-saleinvestments 27 – – 26.8 – – – – – 26.8–increaseinfairvalueofavailable-for-salereceivables 28(a) – – 0.3 – – – – – 0.3–reclassificationadjustmentsrelatingtoavailable-for-saleinvestmentsdisposed 8 – – (287.2) – – – – – (287.2)–cashflowhedge

–increaseinfairvalueofcashflowhedge 18 – – – 35.8 – – – – 35.8–reclassificationtoforeignexchangeloss 9 – – – (3.7) – – – – (3.7)

–currencytranslationdifferences–subsidiaries – – – – – 1.1 – – 1.1Totalcomprehensive(loss)/incomeforthe

financialyear – – (260.1) 32.1 – 1.1 1,191.0 46.1 1,010.2

Transactionswithowners:Sharesissuedupondisposalofsharesattributed

tolapsedoptions 13(e) 9.3 25.5 – – – – – – 34.8BonusissueofRedeemablePreferenceShares(RPS) 13(c) 35.8 (35.8) – – – – – – –RedemptionofRPS 13(c) (35.8) (1,001.6) – – – – – – (1,037.4)Creationofcapitalredemptionreserveupon

redemptionofRPS 13(c) – – – – 35.8 – (35.8) – –Finaldividendpaidforthefinancialyearended

31December2010 12 – – – – – – (351.5) – (351.5)Interimdividendpaidforthefinancialyearended

31December2011 12 – – – – – – (350.6) – (350.6)Disposalofequityinterestinaformersubsidiary – – – – – – – (4.3) (4.3)Dividendspaidtonon-controllinginterests – – – – – – – (29.7) (29.7)Totaltransactionswithowners 9.3 (1,011.9) – – 35.8 – (737.9) (34.0) (1,738.7)

At31December2011 3,577.4 43.2 72.3 32.1 71.6 (0.3) 3,627.7 162.9 7,586.9

* IssuedandfullypaidsharesincludetheSpecialRightsRedeemablePreferenceShare(SpecialShare)ofRM1.00.Refertonote13(a)tothefinancialstatementsfordetailsofthetermsandrightsattachedtotheSpecialShare.

** TheparvalueoftheordinarysharesoftheCompanywasreducedfromRM1.00toRM0.70eacheffective1August2012pursuanttothecapitalrepayment(note13(d)tothefinancialstatements).

TheaboveConsolidatedStatementofChangesinEquityistobereadinconjunctionwiththeNotestotheFinancialStatementsonpages251to379.IndependentAuditors’Report–Pages382to383.

247



Company Statement of Changes in Equity

forthefinancialyearended31December2012

Issued and Fully Paid of RM0.70

each (2011:RM1.00 each)** Non-distributable DistributableSpecial Share*/

Ordinary Shares


ShareCapital

RM

SharePremium

RM

FairValue

ReservesRM

HedgingReserve

RM

CapitalRedemption

ReserveRM

RetainedProfits

RM

TotalEquity

RM

At1January2012 3,577.4 43.2 72.3 32.1 71.6 2,660.4 6,457.0

Profitforthefinancialyear – – – – – 1,081.1 1,081.1 Othercomprehensiveincome


–decreaseinfairvalueofavailable-for-saleinvestments 27 – – (5.3) – – – (5.3)–decreaseinfairvalueofavailable-for-salereceivables 28(a) – – (1.1) – – – (1.1)–reclassificationadjustmentsrelatingtoavailable-forsaleinvestmentsdisposed 8 – – (3.3) – – – (3.3)

–cashflowhedge–decreaseinfairvalueofcashflowhedge 18 – – – (34.9) – – (34.9)–reclassificationtoforeignexchangegain 9 – – – 29.7 – – 29.7

Totalcomprehensive(loss)/incomeforthefinancialyear – – (9.7) (5.2) – 1,081.1 1,066.2

Transactionswithowners:Capitalrepayment** 13(d) (1,073.2) – – – – – (1,073.2)Finaldividendpaidforthefinancialyearended

31December2011 12 – – – – – (350.6) (350.6)Interimdividendpaidforthefinancialyearended

31December2012 12 – – – – – (350.6) (350.6)

Totaltransactionswithowners (1,073.2) – – – – (701.2) (1,774.4)

At 31 December 2012 2,504.2 43.2 62.6 26.9 71.6 3,040.3 5,748.8

248




Issued and Fully Paid of RM0.70

each (2011:RM1.00 each)** Non-distributable DistributableSpecial Share*/

Ordinary Shares


ShareCapital

RM

SharePremium

RM

SpecialESOS

ReserveRM

FairValue

ReservesRM

HedgingReserve

RM

CapitalRedemption

ReserveRM

RetainedProfits

RM

TotalEquity

RM

At1January2011Aspreviouslyreported 3,568.1 1,055.1 200.2 80.8 – 35.8 1,996.9 6,936.9AdjustmentsarisingfromthetransitiontoMFRS 50(a) – – – – – – 229.9 229.9Adjustmentstoprioryears 50(b)(ii) – – – – – – (53.5) (53.5)

At1January2011,asrestated 3,568.1 1,055.1 200.2 80.8 – 35.8 2,173.3 7,113.3

Profitforthefinancialyear – – – – – – 711.2 711.2Othercomprehensiveincome


–decreaseinfairvalueofavailable-for-saleinvestments 27 – – – (5.1) – – – (5.1)–increaseinfairvalueofavailable-for-salereceivables 28(a) – – – 0.3 – – – 0.3–reclassificationadjustmentsrelatingtoavailable-for-saleinvestmentsdisposed 8 – – – (3.7) – – – (3.7)–cashflowhedge

–increaseinfairvalueofcashflowhedge 18 – – – – 35.8 – – 35.8–reclassificationtoforeignexchangeloss 9 – – – – (3.7) – – (3.7)

Totalcomprehensive(loss)/incomeforthefinancialyear – – – (8.5) 32.1 – 711.2 734.8

Transactionswithowners:ExpiredEmployees’ShareOptionScheme(ESOS)-repaymentofcapitalcontributionbyTMESOSManagementSdnBhd(TEM)duetoshareholdertransaction

13(e)&24(c) – – (513.8) – – – 513.8 –

-reversalofimpairmentininvestmentinTEMduetoshareholdertransaction

13(e)&24(c) – – 321.7 – – – – 321.7

Sharesissuedupondisposalofsharesattributedtolapsedoptions 13(e) 9.3 25.5 – – – – – 34.8

TransferofreserveupondisposalofESOSshares – – (8.1) – – – – (8.1)BonusissueofRedeemablePreferenceShares(RPS) 13(c) 35.8 (35.8) – – – – – –RedemptionofRPS 13(c) (35.8) (1,001.6) – – – – – (1,037.4)Creationofcapitalredemptionreserveupon

redemptionofRPS 13(c) – – – – – 35.8 (35.8) –Finaldividendpaidforthefinancialyearended

31December2010 12 – – – – – – (351.5) (351.5)Interimdividendpaidforthefinancialyearended

31December2011 12 – – – – – – (350.6) (350.6)

Totaltransactionswithowners 9.3 (1,011.9) (200.2) – – 35.8 (224.1) (1,391.1)

At31December2011 3,577.4 43.2 – 72.3 32.1 71.6 2,660.4 6,457.0

* IssuedandfullypaidsharesincludetheSpecialRightsRedeemablePreferenceShare(SpecialShare)ofRM1.00.Refertonote13(a)tothefinancialstatementsfordetailsofthetermsandrightsattachedtotheSpecialShare.

** TheparvalueoftheordinarysharesoftheCompanywasreducedfromRM1.00toRM0.70eacheffective1August2012pursuanttothecapitalrepayment(note13(d)tothefinancialstatements).

TheaboveCompanyStatementofChangesinEquityistobereadinconjunctionwiththeNotestotheFinancialStatementsonpages251to379.IndependentAuditors’Report–Pages382to383.

249



Statements of Cash Flowsforthefinancialyearended31December2012



2012RM

2011RM

2012RM

2011RM

CASHFLOWSFROMOPERATINGACTIVITIES 37 2,723.7 3,030.7 2,149.7 2,559.4

CASHFLOWSUSEDININVESTINGACTIVITIES 38 (2,227.9) (1,338.0) (1,710.3) (991.9)

CASHFLOWSUSEDINFINANCINGACTIVITIES 39 (970.5) (962.5) (930.7) (911.4)

NET(DECREASE)/INCREASEINCASHANDCASHEQUIVALENTS (474.7) 730.2 (491.3) 656.1

EFFECTOFEXCHANGERATECHANGES 0.4 (5.6) 3.9 (4.8)

CASHANDCASHEQUIVALENTSATBEGINNINGOFTHEFINANCIALYEAR 4,212.6 3,488.0 3,729.0 3,077.7

CASH AND CASH EqUIVALENTS AT END OF THE FINANCIAL YEAR 34 3,738.3 4,212.6 3,241.6 3,729.0

The above Statements of Cash Flows are to be read in conjunction with the Notes to the Financial Statements on pages251to379.


250




Notes to the Financial Statementsforthefinancialyearended31December2012

All amounts are in million unless otherwise stated

1. PRINCIPAL ACTIVITIES The principal activities of the Company are the establishment, maintenance and provision of telecommunications and

relatedservices.Theprincipalactivitiesofsubsidiariesaresetoutinnote51tothefinancialstatements.TherewasnosignificantchangeintheprincipalactivitiesoftheGroupandtheCompanyduringthefinancialyear.

TelekomMalaysiaBerhadisapubliclimitedliabilitycompany,incorporatedanddomiciledinMalaysia,andislistedontheMainBoardofBursaMalaysiaSecuritiesBerhad.TheregisteredofficeoftheCompanyisLevel51,NorthWing,MenaraTM,JalanPantaiBaharu,50672KualaLumpur.TheprincipalofficeandplaceofbusinessoftheCompanyisMenaraTM,JalanPantaiBaharu,50672KualaLumpur.

2. SIGNIFICANT ACCOUNTING POLICIES Thefollowingaccountingpolicieshavebeenusedconsistentlyindealingwithitemsthatareconsideredmaterialinrelation

to the financial statements, and have been consistently applied to all the financial years presented, unless otherwisestated.

(a) Basis of Preparation of the Financial Statements

ThefinancialstatementsoftheGroupandtheCompanyhavebeenpreparedinaccordancewiththeprovisionsoftheMalaysianFinancialReportingStandards(MFRS),InternationalFinancialReportingStandardsandtherequirementsoftheCompaniesAct,1965.

The financial statements of the Group and the Company for the financial year ended 31 December 2012 are thefirstsetoffinancial statementsprepared inaccordancewith theMFRS includingMFRS1 “First-timeAdoptionofMFRS”.Subjecttocertaintransitionelectionsasdisclosedinnote50(a)tothefinancialstatements,theGroupandtheCompanyhaveconsistentlyappliedthesameaccountingpolicies in itsopeningMFRSStatementsofFinancialPositionat1January2011(transitiondate)andthroughoutallyearspresented,asifthosepolicieshadalwaysbeenineffect.Comparativefiguresfor2011inthesefinancialstatementshavebeenrestatedtogiveeffecttothesechanges.Note50(c)disclosestheimpactofthetransitiontoMFRSontheGroup’sandCompany’sreportedfinancialposition,financialperformanceandcashflows.

ThefinancialstatementshavebeenpreparedunderthehistoricalcostconventionexceptasdisclosedintheSignificantAccountingPoliciesbelow.

The preparation of financial statements in conformity with MFRS requires the use of certain critical accountingestimatesandassumptionsthataffectthereportedamountsofassetsandliabilitiesandthedisclosureofcontingentassetsandliabilitiesatthedateofthefinancialstatements,andthereportedamountsoftherevenueandexpensesduringthereportedperiod.ItalsorequiresDirectorstoexercisetheirjudgmentintheprocessofapplyingtheGroup’sand theCompany’saccountingpolicies.Although theseestimatesand judgmentarebasedon theDirectors’bestknowledgeofcurrenteventsandactions,actualresultsmaydiffer.

The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates aresignificanttothefinancialstatementsaredisclosedinnote3tothefinancialstatements.

251



Notes to the Financial Statementsfor the financial year ended 31 December 2012

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(a) Basis of Preparation of the Financial Statements (continued)

(i) Revised standard and amendments to published standard that are effective and applicable for the Group’s and the Company’s financial year beginning 1 January 2012

In addition to MFRS 1, the revised standard and amendments to published standard that are effective andapplicablefortheGroup’sandtheCompany’sfinancialyearbeginning1January2012,areasfollows:

Effective date

MFRS124(revised) RelatedPartyDisclosures 1January2012AmendmentstoMFRS7 FinancialInstruments:Disclosures–Transfersof

FinancialAssets1January2012

The revised MFRS 124 “Related Party Disclosures” remove the exemption to disclose transactions betweengovernment-relatedentitiesandthegovernment,andallothergovernment-relatedentities.Thefollowingnewdisclosuresarenowrequiredforgovernment-relatedentities:

• thenameofthegovernmentandthenatureoftheirrelationship;• thenatureandamountofeachindividuallysignificanttransactions;and• theextentofanycollectivelysignificanttransactions,qualitativelyorquantitatively.

Therearealsoadditionaldisclosuresrequiredoncommitmentswithrelatedparties.TheadoptionoftherevisedMFRS124doesnothaveanyimpactonthefinancialresultsandfinancialpositionoftheGroupandtheCompanyforthecurrentandpreviousfinancialyearbutrequiresadditionaldisclosuresofmaterialtransactionswiththegovernmentandallothergovernment-relatedentitiesasdisclosedinnote41tothefinancialstatements.

Amendments to MFRS 7 “Financial Instruments: Disclosures – Transfer of Financial Assets” promotestransparencyinthereportingoftransfertransactionsandimproveusers’understandingoftheriskexposuresrelatingtotransfersoffinancialassetsandtheeffectofthoserisksonanentity’sfinancialposition,particularlythose involving securitisation of financial assets. The adoption of this amendment does not have any impactonthefinancialresultsandfinancialpositionoftheGroupandtheCompanybutrequiresadditionaldisclosurewhichisdisclosedinnote28(b)tothefinancialstatements.

(ii) Standard that is not yet effective but has been early adopted by the Group and the Company beginning 1 January 2012

TheGroupandtheCompanyhaveearlyadoptedtheamendmentstoMFRS101“PresentationofItemsofOtherComprehensiveIncome”whichiseffectiveforannualperiodsbeginningonorafter1July2012.

AmendmentstoMFRS101requireentitiestoseparateitemspresentedin‘othercomprehensiveincome’(OCI)intheStatementofComprehensiveIncomeintotwogroups,basedonwhetherornottheymayberecycledtoincomestatementinthefuture.TheamendmentsdonotaddresswhichitemsarepresentedinOCI.

TheearlyadoptionoftheamendmentstoMFRS101hasnoimpactonthefinancialstatementsotherthanthepresentation in other comprehensive income which now discloses separately items that may be reclassifiedsubsequentlytoincomestatement.

252





(iii) Standards and amendments to published standards that are not yet effective and have not been early adopted by the Group and the Company

ThenewstandardsandamendmentstopublishedstandardsthatareapplicabletotheGroupandtheCompany,whichtheGroupandtheCompanyhavenotearlyadopted,areasfollows:

Effective date

AmendmentstoMFRS1,101,116,132and134

AmendmentstoMFRSscontainedinthedocumenttitled“AnnualImprovements2009-2011Cycle”

1January2013

AmendmentstoMFRS7 Disclosure–OffsettingFinancialAssetsandFinancialLiabilities

1January2013

AmendmentstoMFRS10,11and12

ConsolidatedFinancialStatements,JointArrangementsandDisclosureofInterestsinOtherEntities:TransitionGuidance

1January2013

MFRS3 BusinessCombinations(IFRS3issuedbyIASBinMarch2004)

1January2013

MFRS10 ConsolidatedFinancialStatements 1January2013MFRS11 JointArrangements 1January2013MFRS12 DisclosureofInterestsinOtherEntities 1January2013MFRS13 FairValueMeasurement 1January2013MFRS119 EmployeeBenefits(IAS19asamendedbyIASBinJune2011) 1January2013MFRS127 SeparateFinancialStatements(IAS27asamendedbyIASB

inMay2011)1January2013

MFRS127 ConsolidatedandSeparateFinancialStatements(IAS27asrevisedbyIASBinDecember2003)

1January2013

MFRS128 InvestmentsinAssociatesandJointVentures(IAS28asamendedbyIASBinMay2011)

1January2013

AmendmentstoMFRS132

OffsettingFinancialAssetsandFinancialLiabilities 1January2014

MFRS9 FinancialInstruments(IFRS9issuedbyIASBinNovember2009)

1January2015

MFRS9 FinancialInstruments(IFRS9issuedbyIASBinOctober2010)

1January2015

253





(iii) Standards and amendments to published standards that are not yet effective and have not been early adopted by the Group and the Company (continued)

ThenewstandardsandamendmentstopublishedstandardsthatareapplicabletotheGroupandtheCompany,whichtheGroupandtheCompanyhavenotearlyadopted,areasfollows:(continued)

• TheamendmentstoMFRS1“First-timeAdoptionofMalaysianFinancialReportingStandards”clarifythatanentitythathadappliedMFRSsorIFRSsinthepastbutdidnotdosoinitsmostrecentpreviousannualfinancialstatementsmusteitherapplyMFRS1orMFRS108AccountingPolicies,Changes inEstimatesandErrorsintheperiodthattheentitydecidestoreapplytheMFRSframework.Afirst-timeadopterthatcapitalisedborrowingcostsbeforethedateoftransitiontoMFRSsshallcarryforwardwithoutadjustmenttheamountpreviouslycapitalisedatthedateoftransition.

• AmendmentstoMFRS101“PresentationofFinancialStatements”clarifythedifferencebetweenvoluntaryandminimumrequiredcomparativeinformationandrelatednotestothefinancialstatementsbeyondtheminimumrequiredcomparativeperiod. Inadditionanentityshallpresenta thirdstatementoffinancialposition only if a retrospective application, restatement or reclassification has a material effect on thestatementoffinancialpositionatthebeginningoftheprecedingperiod.

• AmendmentstoMFRS116“Property,PlantandEquipment”clarifytheclassificationofservingequipmentsuchasspareparts,stand-byequipmentandservicingequipmenttoberecognisedasproperty,plantandequipmentwhenthedefinitionofproperty,plantandequipmentismet.

• Amendments to MFRS 132 “Financial Instruments: Presentation” clarify the tax effect of distribution toholdersofequityinstrumenttobeaccountedforinaccordancewithMFRS112“IncomeTaxes”.

• AmendmentstoMFRS134“InterimFinancialReporting”aimtoobtainconsistencywithMFRS8“OperatingSegments”requiringanentitytodisclosethetotalassetsandliabilitiesforareportablesegmentonlywhentheamountsareregularlyprovidedtothechiefoperatingdecisionmakerandtherehasbeenamaterialchangefromtheamountdisclosedinthelastannualfinancialstatements.

• AmendmentstoMFRS7“FinancialInstrument:Disclosures”requiremoreextensivedisclosuresfocusingonqualitativeinformationaboutrecognisedfinancialinstrumentsthatareoffsetinthestatementoffinancialpositionandthosethataresubjecttomasternettingorsimilararrangementsirrespectiveofwhethertheyareoffset.

• AmendmentstoMFRS10“ConsolidatedFinancialStatements”,MFRS11“JointArrangements”andMFRS12“DisclosureofInterestinOtherEntities”clarifythe“dateofinitialapplication”.DateofinitialapplicationinMFRS10meansthebeginningoftheannualreportingperiodinwhichMFRS10isappliedforthefirsttime.AnentityisnotrequiredtoadjustitspreviousaccountingiftheconclusionreacheduponapplicationofMFRS10isthesameaspreviousaccountingortheinterestintheinvesteehasbeendisposedduringthecomparativeperiod.Consequently,MASBissuedMFRS32004“BusinessCombination”andMFRS1272003“ConsolidatedandSeparateFinancialStatements”wherebytheentityisallowedtoapplythesestandardsfor those entities which was not previously consolidated and is now required to be consolidated underMFRS10.

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• MFRS10“ConsolidatedFinancialStatements”changesthedefinitionofcontrol.An investorcontrolsaninvesteewhenitisexposed,orhasrights,tovariablereturnsfromitsinvolvementwiththeinvesteeandhas the ability to affect those returns through its power over the investee. It establishes control as thebasisfordeterminingwhichentitiesareconsolidatedintheconsolidatedfinancialstatementsandsetsouttheaccountingrequirementsforthepreparationofconsolidatedfinancialstatements. ItreplacesalltheguidanceoncontrolandconsolidationinMFRS127“ConsolidatedandSeparateFinancialStatements”andICInterpretation112“Consolidation–SpecialPurposeEntities”.

• MFRS 11 “Joint Arrangements” requires a party to a joint arrangement to determine the type of jointarrangementinwhichitisinvolvedbyassessingitsrightsandobligationsarisingfromthearrangement,ratherthanitslegalform.Therearetwotypesofjointarrangement:jointoperationsandjointventures.Jointoperationsarisewhereajointoperatorhasrightstotheassetsandobligationsrelatingtothearrangementandhenceaccountsforitsinterestinassets,liabilities,revenueandexpenses.Jointventuresarisewherethejointoperatorhasrightstothenetassetsofthearrangementandhenceequityaccountsforitsinterest.Proportionalconsolidationofjointventuresisnolongerallowed.

• MFRS12“DisclosureofInterestsinOtherEntities”setsouttherequireddisclosuresforentitiesreportingunderthetwonewstandards,MFRS10andMFRS11,andreplacesthedisclosurerequirementscurrentlyfound in MFRS 128 “Investments in Associates”. It requires entities to disclose information that helpsfinancialstatementreaderstoevaluatethenature,risksandfinancialeffectsassociatedwiththeentity’sinterestsinsubsidiaries,associates,jointarrangementsandunconsolidatedstructuredentities.

• MFRS 13 “Fair Value Measurement” aims to improve consistency and reduce complexity by providing aprecisedefinitionoffairvalueandasinglesourceoffairvaluemeasurementanddisclosurerequirementsforuseacrossMFRSs.Therequirementsdonotextendtheuseoffairvalueaccountingbutprovideguidanceonhowitshouldbeappliedwhereitsuseisalreadyrequiredorpermittedbyotherstandards.TheenhanceddisclosurerequirementsaresimilartothoseinMFRS7“FinancialInstruments:Disclosures”,butapplytoallassetsandliabilitiesmeasuredatfairvalue,notjustfinancialassetsandliabilities.

• Amendments to MFRS 119 “Employee Benefits” make significant changes to the recognition andmeasurementofdefinedbenefitpensionexpenseandterminationbenefits,andtothedisclosuresforallemployeebenefits.Actuarialgainsandlosseswillnolongerbedeferredusingthecorridorapproach.MFRS119shallbewithdrawnonapplicationofthisamendment.

• The revised MFRS 127 “Separate Financial Statements” includes the provisions on separate financialstatementsthatareleftafterthecontrolprovisionsofMFRS127havebeenincludedinthenewMFRS10.

• TherevisedMFRS128“InvestmentsinAssociatesandJointVentures”includestherequirementsforjointventures,aswellasassociates,tobeequityaccountedfollowingtheissueofMFRS11.

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• Amendments to MFRS 132 “Financial Instruments: Presentation” do not change the current offsettingmodelinMFRS132.Itclarifiesthemeaningof‘currentlyhasalegallyenforceablerighttosetoff’wheretherighttosetoffmustbeavailabletoday(notcontingentonafutureevent)andlegallyenforceableforallcounterpartiesinthenormalcourseofbusiness.ItclarifiesthatsomegrosssettlementmechanismswithfeaturesthatareeffectivelyequivalenttonetsettlementwillsatisfytheMFRS132offsettingcriteria.

• MFRS 9 “Financial Instruments – Classification and Measurement of Financial Assets and FinancialLiabilities” replaces the multiple classification and measurement models in MFRS 139 with a singlemodelthathasonlytwoclassificationcategories:amortisedcostandfairvalue.Thebasisofclassificationdependsontheentity’sbusinessmodelformanagingthefinancialassetsandthecontractualcashflowcharacteristicsofthefinancialasset.

The accounting and presentation for financial liabilities and for de-recognising financial instrumentshavebeenrelocatedfromMFRS139,withoutchange,exceptforfinancialliabilitiesthataredesignatedatfairvaluethroughprofitor loss(FVTPL).Entitieswithfinancial liabilitiesdesignatedatFVTPLrecognisechangesinthefairvalueduetochangesintheliability’screditriskdirectlyinothercomprehensiveincome(OCI).ThereisnosubsequentrecyclingoftheamountsinOCItoprofitorloss,butaccumulatedgainsorlossesmaybetransferredwithinequity.

TheguidanceinMFRS139onimpairmentoffinancialassetsandhedgeaccountingcontinuestoapply.

MFRS7requiresdisclosuresontransitionfromMFRS139toMFRS9.

TheadoptionoftheaboveapplicablestandardsandamendmentstopublishedstandardsarenotexpectedtohaveamaterialimpactonthefinancialstatementsoftheGroupandtheCompanyexceptforMFRS9.

MFRS9willimpacttheclassificationandmeasurementoffinancialassetseitheratfairvalueoramortisedcost.TheGroupiscurrentlyassessingtheimpacttotheGroup’saccountingpoliciesandfinancialstatements.

Therearenootherstandards,amendmentstopublishedstandardsorICInterpretationsthatarenotyeteffectivethatwouldbeexpectedtohaveamaterialimpactontheGrouportheCompany.

(b) Economic Entities in the Group

(i) Subsidiaries

Subsidiariesarethosecorporationsorotherentities(includingspecialpurposeentities)inwhichtheGrouphaspowertoexercisecontroloverthefinancialandoperatingpoliciessoastoobtainbenefitsfromtheiractivities,generallyaccompanyingashareholdingofmorethanonehalfofthevotingrights.TheexistenceandeffectofpotentialvotingrightsthatarecurrentlyexercisableorconvertibleareconsideredwhenassessingwhethertheGroupcontrolsanotherentity.

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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(b) Economic Entities in the Group (continued)

(i) Subsidiaries (continued)

Subsidiaries are consolidated using the acquisition method of accounting except for business combinationsinvolvingentitiesorbusinessesundercommoncontrolwithagreementdateson/after1January2006,whichwereaccountedforusingthemergermethod.

TheGrouphastakenadvantageoftheexemptionprovidedbyMFRS1tonotrestatebusinesscombinationsthatoccurredbeforethedateoftransitiontoMFRSi.e.1January2011.Accordingly,businesscombinationsenteredintopriortotransitiondatehavenotbeenrestated.

Undertheacquisitionmethodofaccounting,subsidiariesarefullyconsolidatedfromthedateonwhichcontrolistransferredtotheGroupandareexcludedfromconsolidationfromthedatethatcontrolceases.

The consideration transferred for acquisition of a subsidiary is the fair values of the assets transferred, theliabilitiesincurredandtheequityinterestsissuedbytheGroup.Theconsiderationtransferredincludesthefairvalueofanyassetorliabilityresultingfromacontingentconsiderationarrangement.Acquisition-relatedcostsare expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in abusinesscombinationaremeasuredinitiallyattheirfairvaluesattheacquisitiondate.

Inabusinesscombinationachievedinstages,thepreviouslyheldequityinterestintheacquireeisremeasuredatitsacquisitiondatefairvalueandtheresultinggainorlossisrecognisedintheConsolidatedIncomeStatement.

Theexcessoftheconsiderationtransferred,theamountofanynon-controllinginterestintheacquireeandtheacquisition-datefairvalueofanypreviousequityinterestintheacquireeoverthefairvalueoftheGroup’sshareoftheidentifiablenetassetsacquiredisrecordedasgoodwill.Ifthisislessthanthefairvalueofthenetassetsofthesubsidiaryacquiredinthecaseofabargainpurchase,thegainisrecognisedintheConsolidatedIncomeStatement(refertoSignificantAccountingPoliciesnote2(f)(i)onGoodwill).

Non-controllinginterestistheequityinasubsidiarynotattributable,directlyorindirectly,toaparent.Onanacquisition-by-acquisitionbasis,theGroupmeasuresanynon-controllinginterestintheacquireeeitheratfairvalueoratthenon-controllinginterest’sproportionateshareoftheacquiree’sidentifiablenetassets.Attheendofreportingperiod,non-controllinginterestconsistsofamountcalculatedonthedateofcombinationsanditsshareofchangesinthesubsidiary’sequitysincethedateofcombination.

Effectivefrom1January2011,allearningsandlossesofthesubsidiaryareattributedtotheparentandthenon-controllinginterest,eveniftheattributionoflossestothenon-controllinginterestresultsinadebitbalanceintheshareholders’equity.Profitorlossattributiontonon-controllinginterestsforprioryearsisnotrestated.

Underthemergermethodofaccounting,theresultsofsubsidiariesarepresentedasifthemergerhadbeeneffectedthroughoutthecurrentandpreviousyears.Theassetsandliabilitiescombinedareaccountedforbasedonthecarryingamountsfromtheperspectiveofthecommoncontrolshareholderatthedateoftransfer.Onconsolidation,thecostofthemergeriscancelledwiththevaluesofthesharesreceived.Anyresultingcreditdifferenceisclassifiedasequityandregardedasanon-distributablereserve.Anyresultingdebitdifferenceisadjustedagainstanysuitablereserve.Anysharepremium,capitalredemptionreserveandanyotherreserveswhichareattributabletosharecapitalofthemergedenterprises,totheextentthattheyhavenotbeencapitalisedbyadebitdifference,arereclassifiedandpresentedasmovementinothercapitalreserves.

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(i) Subsidiaries (continued)

Intra-grouptransactions,balancesandunrealisedgainsorlossesontransactionsbetweenGroupcompaniesareeliminated.AccountingpoliciesofsubsidiarieshavebeenchangedwherenecessarytoensureconsistencywiththeaccountingpoliciesadoptedbytheGroup.

ThegainorlossondisposalofasubsidiaryisthedifferencebetweenthenetdisposalproceedsandtheGroup’sshareofthesubsidiary’snetassetsasofthedateofdisposal,includingthecumulativeamountofanyexchangedifferencesthatrelatetothatsubsidiaryandisrecognisedintheConsolidatedIncomeStatement.

(ii) Transactions with non-controlling interests

TheGroupappliesapolicyof treating transactionswithnon-controlling interestsas transactionswithequityownersoftheGroup.Forpurchasesfromnon-controllinginterests,thedifferencebetweenanyconsiderationpaidandtherelevantshareofthecarryingvalueofnetassetsofthesubsidiaryacquiredisdeductedfromequity.Fordisposalstonon-controllinginterests,differencesbetweenanyproceedsreceivedandtherelevantshareofnon-controllinginterestsarealsorecognisedinequity.

(iii) Associates

Associatesarecorporations,partnershipsorotherentitiesinwhichtheGroupexercisessignificantinfluencebutwhichitdoesnotcontrol,generallyaccompanyingashareholdingofbetween20%and50%ofthevotingrights.Significantinfluenceisthepowertoparticipateinthefinancialandoperatingpolicydecisionsoftheassociatesbutnotcontroloverthosepolicies.

Investmentsinassociatesareaccountedforintheconsolidatedfinancialstatementsusingtheequitymethodofaccountingandareinitiallyrecognisedatcost.EquityaccountingisdiscontinuedwhentheGroupceasestohavesignificantinfluenceovertheassociates.TheGroup’sinvestmentsinassociatesincludegoodwillidentifiedonacquisition,netofanyaccumulatedimpairmentloss.

TheGroup’sshareofitsassociates’post-acquisitionprofitsorlossesisrecognisedintheConsolidatedIncomeStatements,anditsshareofpost-acquisitionmovementsinreservesisrecognisedwithinothercomprehensiveincome.Thecumulativepost-acquisitionmovementsareadjustedagainstthecarryingamountoftheinvestments.WhentheGroup’sshareoflossesinanassociateequalsorexceedsitsinterestintheassociate,includinganyotherunsecuredreceivables,theGroup’sinterestisreducedtonilandrecognitionoffurtherlossisdiscontinuedexcepttotheextentthattheGrouphasincurredlegalorconstructiveobligationsormadepaymentsonbehalfoftheassociate.

TheGroupdeterminesateachreportingdatewhether there isanyobjectiveevidence that the investment intheassociateisimpaired.Ifthisisthecase,theGroupcalculatestheamountofimpairmentasthedifferencebetweentherecoverableamountoftheassociateanditscarryingvalueandrecognisestheamountadjacentto‘shareofprofit/(loss)ofanassociate’intheincomestatement.

The results of associates are taken from the most recent unaudited financial statements of the associatesconcerned,madeuptodatesnotmorethan3monthspriortotheendofthefinancialyearoftheGroup.

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(iii) Associates (continued)

UnrealisedgainsontransactionsbetweentheGroupanditsassociatesareeliminatedtotheextentoftheGroup’sinterestintheassociates;unrealisedlossesarealsoeliminatedunlessthetransactionprovidesevidenceofanimpairmentoftheassettransferred.Wherenecessary,inapplyingtheequitymethod,appropriateadjustmentsaremadetothefinancialstatementsoftheassociatestoensureconsistencyofaccountingpolicieswiththoseoftheGroup.

DilutiongainsandlossesarerecognisedintheConsolidatedIncomeStatement.

WhentheGroupincreasesitsstakeinanexistinginvestmentandtheinvestmentbecomesanassociateforthefirsttime,goodwilliscalculatedateachstageoftheacquisition.TheGroupdoesnotrevalueitspreviouslyownedshare of net assets to fair value. Any existing available-for-sale reserve is reversed in other comprehensiveincome,restatingtheinvestmenttocost.Ashareofprofits(afterdividends)togetherwithashareofanyequitymovementsrelatingtothepreviouslyheldinterestareaccountedforinothercomprehensiveincome.

ThegainorlossondisposalofanassociateisthedifferencebetweenthenetdisposalproceedsandtheGroup’sshareoftheassociate’snetassetsasofthedateofdisposal,includingthecumulativeamountofanyexchangedifferencesthatrelatetothatassociatewhichwerepreviouslyrecognisedinothercomprehensiveincome,andisrecognisedintheConsolidatedIncomeStatement.

(iv) Changes in Ownership Interests

WhentheGroupceasestohavecontrol,jointcontrolorsignificantinfluence,anyretainedinterestintheentityis remeasured to its fair value with the change in carrying amount recognised in the Consolidated IncomeStatement.ThisfairvalueisitsfairvalueoninitialrecognitionasafinancialassetinaccordancewithMFRS139.AnyamountspreviouslyrecognisedinothercomprehensiveincomeinrespectofthatentityareaccountedforasiftheGrouphaddirectlydisposedoftherelatedassetsorliabilities.

(c) Investments in Subsidiaries and Associates

InvestmentsinsubsidiariesandassociatesarestatedatcostlessaccumulatedimpairmentlossesintheseparatefinancialstatementsoftheCompany.Whereanindicationofimpairmentexists,thecarryingamountoftheinvestmentisassessedandwrittendownimmediatelytoitsrecoverableamount(refertoSignificantAccountingPoliciesnote2(g)onImpairmentofNon-FinancialAssets).ImpairmentlossesarechargedtotheIncomeStatement.

Ondisposalofinvestmentsinsubsidiariesandassociates,thedifferencebetweenthenetdisposalproceedsandthecarryingamountsoftheinvestmentsarerecognisedintheIncomeStatement.

(d) Property, Plant and Equipment

Property,plantandequipmentarestatedatcostlessaccumulateddepreciationandimpairmentlosses.Costincludesexpenditurethatisdirectlyattributabletotheacquisitionoftheitems.

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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(d) Property, Plant and Equipment (continued)

(i) Cost

Costoftelecommunicationsnetworkcomprisesexpenditureuptoandincludingthelastdistributionpointbeforethecustomers’premisesandincludescontractors’charges,materials,directlabourandrelatedoverheads.Thecostofotherproperty,plantandequipmentcomprisestheirpurchasecostandanyincidentalcostofacquisition.Thesecosts include thecostsofdismantling, removaland restoration, theobligationwhichwas incurredasaconsequenceof installingtheasset.Costalso includesborrowingcoststhataredirectlyattributabletotheacquisition,constructionorproductionofaqualifyingasset(refertoSignificantAccountingPoliciesnote2(p)(ii)onborrowingcosts).

Subsequentcostisincludedinthecarryingamountoftheassetorrecognisedasaseparateasset,asappropriate,onlywhenitisprobablethatthefutureeconomicbenefitassociatedwiththeitemwillflowtotheGroupandthecostoftheitemcanbemeasuredreliably.Thecarryingamountofthereplacedpartisderecognised.AllotherrepairsandmaintenancearechargedtotheIncomeStatementduringtheperiodinwhichtheyareincurred.

(ii) Depreciation

Freeholdlandisnotdepreciatedasithasaninfinitelife.Leaseholdlandclassifiedasfinanceleaseisamortisedinequalinstallmentsovertheperiodoftherespectivelease.Longtermleaseholdlandhasanunexpiredleaseperiodof50yearsandabove.Otherproperty,plantandequipmentaredepreciatedonastraightlinebasistowriteoffthecostoftheassetstotheirresidualvaluesovertheirestimatedusefullivesinyearsassummarisedbelow:

Telecommunicationsnetwork 3–25Movableplantandequipment 5–8Computersupportsystems 3–5Buildings 5–40

Capital work-in-progress are stated at cost and are not depreciated. Upon completion, capital work-in-progressaretransferredtocategoriesofproperty,plantandequipmentdependingonthenatureoftheassets.Depreciationonproperty,plantandequipmentunderconstructioncommenceswhentheproperty,plantandequipmentarereadyfortheirintendeduse.Depreciationonproperty,plantandequipmentceasesattheearlierofderecognitionandclassificationasheldforsale.

Theassets’residualvaluesandusefullivesarereviewedandadjustedasappropriateateachreportingdate.

(iii) Impairment

Ateachreportingdate, theGroupassesseswhether there isany indicationof impairment. Ifsuch indicationexists,ananalysisisperformedtoassesswhetherthecarryingvalueoftheassetisfullyrecoverable.Awritedownismadeifthecarryingvalueexceedstherecoverableamount(refertoSignificantAccountingPoliciesnote2(g)onImpairmentofNon-FinancialAssets).

(iv) Gains or Losses on Disposal

GainsorlossesondisposalaredeterminedbycomparingtheproceedswiththecarryingamountoftherelatedassetandareincludedinotheroperatingincomeintheIncomeStatement.

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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(d) Property, Plant and Equipment (continued)

(v) Asset Exchange Transaction

Property,plantandequipmentmaybeacquiredinexchangeforanon-monetaryassetorforacombinationofmonetaryandnon-monetaryassetsandismeasuredatfairvaluesunless,

• theexchangetransactionlackscommercialsubstance;or

• thefairvalueofneithertheassetsreceivednortheassetsgivenupcanbemeasuredreliably.

TheacquireditemismeasuredinthiswayeveniftheGroupcannotimmediatelyderecognisetheassetsgivenup.Iftheacquireditemisnotreliablymeasuredatfairvalue,itscostismeasuredatthecarryingamountoftheassetgivenup.

(vi) Repairs and Maintenance

RepairsandmaintenancearechargedtotheIncomeStatementduringtheperiodinwhichtheyareincurred.ThecostofmajorrenovationsisincludedinthecarryingamountoftheassetwhenitisprobablethatfutureeconomicbenefitsinexcessoftheoriginallyassessedstandardofperformanceoftheexistingassetwillflowtotheGroup.Thiscostisdepreciatedovertheremainingusefullifeoftherelatedasset.

(e) Investment Properties

Investmentproperties,principallycomprising landandofficebuildings,areheld for longtermrentalyieldsor forcapitalappreciationorforboth,andarenotoccupiedbytheGrouportheCompany.

Investmentpropertiesarecarriedatcostlessaccumulateddepreciationandimpairmentlosses.Investmentpropertiesaredepreciatedonastraightlinebasistowriteoffthecostoftheinvestmentpropertiestotheirresidualvaluesovertheirestimatedusefullivesinyearsassummarisedbelow:

Leaseholdland overtheperiodoftherespectiveleasesBuildings 5–40

Freeholdlandisnotdepreciatedasithasaninfinitelife.

Subsequentexpenditureiscapitalisedtotheasset’scarryingamountonlywhenitisprobablethatfutureeconomicbenefitsassociatedwiththeexpenditurewillflowtotheGroupandthecostoftheitemcanbemeasuredreliably.Allotherrepairsandmaintenancecostsareexpensedwhenincurred.Whenpartofaninvestmentpropertyisreplaced,thecarryingamountofthereplacedpartisderecognised.

Ondisposalofaninvestmentproperty,orwhenitispermanentlywithdrawnfromuseandnofutureeconomicbenefitsareexpected, then itshallbederecognised(eliminatedfromtheStatementofFinancialPosition).Gainor lossondisposal isdeterminedbycomparing thenetdisposalproceedswith thecarryingamountandare included in theIncomeStatement.

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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(f) Intangible Assets

(i) Goodwill

GoodwillrepresentstheexcessofthecostofacquisitionofsubsidiariesovertheGroup’sshareofthefairvalueoftheidentifiablenetassetsincludingcontingentliabilitiesofsubsidiariesatthedateofacquisition.Goodwillonacquisitionoccurringonorafter1January2002inrespectofasubsidiaryis includedintheConsolidatedStatementofFinancialPositionasanintangibleasset.Goodwillonacquisitionsthatoccurredpriorto1January2002waswrittenoffagainstreservesintheyearofacquisition.

AspartofthetransitiontoMFRS,theGroupelectednottorestatebusinesscombinationsthatoccurredbeforethedateoftransitiontoMFRSi.e.1January2011.Goodwillarisingfromacquisitionsbefore1January2011hasbeencarriedforwardfromthepreviousFinancialReportingStandardsframeworkasatthedateoftransition.

Goodwill is carried at cost less accumulated impairment losses. Goodwill is tested for impairment at leastannually, or when events or circumstances occur indicating that an impairment may exist. Impairment ofgoodwillischargedtotheConsolidatedIncomeStatementasandwhenitarises.Impairmentlossesongoodwillarenotreversed.Gainsandlossesonthedisposalofanentityincludethecarryingamountofgoodwillrelatingtotheentitydisposed.

Goodwillisallocatedtocash-generatingunitsforthepurposeofimpairmenttesting.Eachcash-generatingunitoragroupofcash-generatingunitsrepresentsthelowestlevelwithintheGroupatwhichgoodwillismonitoredforinternalmanagementpurposesandwhichareexpectedtobenefitfromthesynergiesofthecombination.

(ii) Software

CoststhataredirectlyassociatedwithidentifiableanduniquesoftwareproductscontrolledbytheGroupandthatwillprobablygenerateeconomicbenefitsexceedingcostsbeyondoneyear,arerecognisedasintangibleassets.Amortisationiscalculatedusingstraightlinemethodat20%perannumsubjecttoimpairment.

(iii) Programme Rights

Programmerightscompriserights licensed fromthirdpartieswith theprimary intention tobroadcast in thenormalcourseofoperatingcycle.Therightsarestatedatcostlessaccumulatedamortisationandaccumulatedimpairmentlosses(refertoSignificantAccountingPoliciesnote2(g)onImpairmentofNon-FinancialAssets).

TheGroupamortisesprogrammerightsonastraight-linebasisoverthelicenseperiodorestimatedusefullifeifshorter,fromthedateoffirsttransmission,tomatchthecostsofconsumptionwiththeestimatedbenefitstobereceived.AmortisationisincludedintheIncomeStatement.

(g) Impairment of Non-Financial Assets

Assetsthathaveanindefiniteusefullifearenotsubjecttoamortisationandaretestedforimpairmentannually,orasandwheneventsorcircumstancesoccurindicatingthatanimpairmentmayexist.Property,plantandequipmentand other non-current assets, including intangible assets with definite useful life, are reviewed for impairmentlosseswhenevereventsorchangesincircumstancesindicatethatthecarryingamountmaynotberecoverable.Animpairment loss is recognised for theamountbywhich thecarryingamountof theassetexceeds its recoverableamount. The recoverable amount is the higher of an asset’s fair value lesscost tosell and value-in-use.For thepurposeofassessingimpairment,assetsaregroupedatthelowestlevelforwhichthereisseparately identifiablecashflows(cash-generatingunits).Assetsotherthangoodwillthatsufferedanimpairmentarereviewedforpossiblereversalateachreportingdate.

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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(g) Impairment of Non-Financial Assets (continued)

TheimpairmentlossischargedtotheIncomeStatement.Impairmentlossesongoodwillarenotreversed.Inrespectofotherassets,anysubsequentincreaseinrecoverableamountisrecognisedintheIncomeStatement.

(h) Financial Assets

Financialassetsareclassifiedinthefollowingcategories:atfairvaluethroughprofitorloss,loansandreceivablesandavailable-for-sale.Managementdeterminestheclassificationofitsfinancialassetsatinitialrecognitionbasedonthenatureoftheassetandthepurposeforwhichtheassetwasacquired.

(i) Financial Assets at Fair Value through Profit or Loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset isclassifiedinthiscategoryifacquiredprincipallyforthepurposeofsellingintheshortterm.Derivativesarealsocategorisedasheldfortradingunlesstheyaredesignatedashedges.Assetsinthiscategoryareclassifiedascurrentassets.

Quotedequitysecurities(withincurrentassets),determinedonanaggregateportfoliobasis,areclassifiedasfinancialassetsatfairvaluethroughprofitorloss.Financialassetscarriedatfairvaluethroughprofitorlossareinitiallyrecognisedatfairvalue,andtransactioncostsareexpensedtotheIncomeStatement.

ChangesinthefairvaluesoffinancialassetsatfairvaluethroughprofitorlossarerecognisedintheIncomeStatementintheperiodinwhichthechangesarise.

(ii) Loans and Receivables

Loansandreceivablesarenon-derivativefinancialassetswithfixedordeterminablepaymentsthatarenotquotedinanactivemarket.Theyare included incurrentassets,except formaturitiesgreater than12monthsaftertheendofthereportingperiod.Theseareclassifiedasnon-currentassets.TheGroup’sloansandreceivablescomprisenon-currentreceivables,tradeandotherreceivablesandcashandbankbalancesintheStatementofFinancialPosition.

Othernon-currentreceivables,areclassifiedasloansandreceivablesandmeasuredatfairvalueplustransactioncostsinitiallyandsubsequently,atamortisedcostusingtheeffectiveinterestmethod.

Whenloansandreceivablesareimpaired,thecarryingamountoftheassetisreducedandtheamountofthelossisrecognisedintheIncomeStatement.Impairmentlossismeasuredasthedifferencebetweentheasset’scarryingamountandthepresentvalueofestimatedfuturecashflows(excludingfuturecreditlossesthathavenotbeenincurred)discountedattheasset’soriginaleffectiveinterestrate.

(iii) Available-for-sale Financial Assets

Available-for-salefinancialassetsarenon-derivativesthatareeitherdesignatedinthiscategoryornotclassifiedin any of the other categories. They are included in non-current assets unless the investment matures ormanagementintendstodisposeofitwithin12monthsfromtheendofthereportingperiod.

Fixed income securities (within current assets) and certain non-current equity investments are classified asavailable-for-saleinvestments,whilstconvertibleeducationloans(withinnon-currentassets)areclassifiedasavailable-for-salereceivables.Theseareinitiallymeasuredatfairvalueplustransactioncostsandsubsequently,atfairvalue.

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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(h) Financial Assets (continued)

(iii) Available-for-sale Financial Assets (continued)

Changes in the fair values of available-for-sale investments are recognised in other comprehensive income.Whereas, changes in the fair value of available-for-sale receivables classified as non-current assets can beanalysed by way of changes arising from conversion of the receivables to scholarship and other fair valuechanges.ChangesarisingfromtheconversionarerecognisedintheIncomeStatement,whereas,otherfairvaluechangesarerecognisedinothercomprehensiveincome.Interestsonavailable-for-salereceivablescalculatedusingtheeffectiveinterestmethodarerecognisedintheIncomeStatement.

Whenavailable-for-salefinancialassetsaresold,theaccumulatedfairvalueadjustmentsrecognisedinothercomprehensiveincomearereclassifiedtotheIncomeStatement.

(iv) Derecognition

FinancialassetsarederecognisedwhentherightstoreceivecashflowsfromtheinvestmentshaveexpiredorhavebeentransferredandtheGrouphastransferredsubstantiallyallrisksandrewardsofownership.

Receivablesthatarefactoredouttobanksandotherfinancial institutionswithrecoursetotheGrouparenotderecogniseduntiltherecourseperiodhasexpiredandtherisksandrewardsofthereceivableshavebeenfullytransferred.Thecorrespondingcashreceivedfromthefinancialinstitutionsisrecordedasborrowings.

(v) Offsetting Financial Instruments

FinancialassetsandliabilitiesareoffsetandthenetamountpresentedontheStatementofFinancialPositionwhenthereisalegallyenforceablerighttooffsettherecognisedamountsandthereisanintentiontosettleonanetbasis,orrealisetheassetandsettletheliabilitysimultaneously.

(i) Impairment of Financial Assets

(i) Assets Carried at Amortised Cost

The Group assesses at the end of each reporting period whether there is objective evidence that a financialassetoragroupoffinancialassetsisimpaired.Afinancialassetoragroupoffinancialassetsisimpairedandimpairment losses are incurred only if there is objective evidence of impairment as a result of one or moreeventsthatoccurredaftertheinitialrecognitionoftheasset(a‘lossevent’)andthatlossevent(orevents)hasanimpactontheestimatedfuturecashflowsofthefinancialassetorgroupoffinancialassetsthatcanbereliablyestimated.

ThecriteriathattheGroupusestodeterminethatthereisobjectiveevidenceofanimpairmentlossinclude:

• significantfinancialdifficultyofthecustomerorobligor;

• abreachofcontract,suchasadefaultordelinquencyininterestorprincipalpayments;

• itbecomesprobablethatthecustomerswillenterbankruptcyorotherfinancialreorganisation;

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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(i) Impairment of Financial Assets (continued)

(i) Assets Carried at Amortised Cost (continued)

• observabledataindicatingthatthereisameasurabledecreaseintheestimatedfuturecashflowsfromaportfoliooffinancialassetssincetheinitialrecognitionofthoseassets,althoughthedecreasecannotyetbeidentifiedwiththeindividualfinancialassetsintheportfolio,including:

– adversechangesinthepaymentstatusofcustomersintheportfolio;and

– nationalorlocaleconomicconditionsthatcorrelatewithdefaultsontheassetsintheportfolio.

Theamountofthelossismeasuredasthedifferencebetweentheasset’scarryingamountandthepresentvalueofestimated futurecashflows (excluding futurecredit losses thathavenotbeen incurred)discountedat thefinancialasset’soriginaleffectiveinterestrate.Theasset’scarryingamountisreducedandtheamountofthelossisrecognisedintheIncomeStatement.Ifaloanhasavariableinterestrate,thediscountrateformeasuringanyimpairmentlossisthecurrenteffectiveinterestratedeterminedunderthecontract.Asapracticalexpedient,theGroupmaymeasureimpairmentonthebasisofaninstrument’sfairvalueusinganobservablemarketprice.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be relatedobjectivelytoaneventoccurringaftertheimpairmentwasrecognised(suchasanimprovementinthedebtor’screditrating),thereversalofthepreviouslyrecognisedimpairmentlossisrecognisedintheIncomeStatement.

(ii) Assets Classified as Available-for-sale

Inthecaseofequityandfixedincomesecuritiesclassifiedasavailable-for-sale,inadditiontothecriteriafor‘assetscarriedatamortisedcost’above,thefollowingcriteriaarealsoconsideredasindicatorsofimpairment:

• significantfinancialdifficultyoftheissuerorobligor;

• thedisappearanceofanactivemarketforthatfinancialassetbecauseoffinancialdifficulties;or

• asignificantorprolongeddeclineinthefairvalueofthefinancialassetbelowitscostisconsideredasanindicatorthattheassetisimpaired.

Ifanysuchevidenceexists,thecumulativeloss,measuredasthedifferencebetweentheacquisitioncostandthecurrentfairvalue,lessanyimpairmentlosspreviouslyrecognisedintheIncomeStatement,isreversedfromequityandrecognisedintheIncomeStatement.If,inasubsequentperiod,thefairvalueofadebtinstrumentincreases and the increase can be objectively related to an event occurring after the impairment loss wasrecognisedintheIncomeStatement,theimpairmentlossisreversedthroughtheIncomeStatement.ImpairmentlossesrecognisedintheIncomeStatementonequityinstrumentsclassifiedasavailable-for-salearereversedthroughothercomprehensiveincomeandnotthroughtheIncomeStatement.

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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(j) Derivative Financial Instruments and Hedging Activities

DerivativefinancialinstrumentsarerecognisedandmeasuredatfairvalueonthedateaderivativecontractisenteredintoandaresubsequentlyremeasuredatfairvaluewithchangesinfairvaluerecognisedintheIncomeStatementateachreportingdate.Themethodofrecognisingtheresultinggainorlossdependsonwhetherthederivative isdesignatedasahedginginstrument,andifso,thenatureoftheitembeinghedged.TheGroupdesignatescertainderivatives as either hedges of the fair value of recognised assets or liabilities (fair value hedge) or hedges of aparticularriskassociatedwitharecognisedassetorliability(cashflowhedge).

TheGroupdocumentsattheinceptionofthetransactiontherelationshipbetweenhedginginstrumentsandhedgeditems, as well as its risk management objectives and strategy for undertaking various hedging transactions. TheGroupalsodocumentsitsassessment,bothathedgeinceptionandonanongoingbasis,ofwhetherthederivativesthatareusedinhedgingtransactionsarehighlyeffectiveinoffsettingchangesinfairvaluesorcashflowsofhedgeditems.

Thefullfairvalueofahedgingderivativeisclassifiedasanon-currentassetorliabilitywhentheremainingmaturityofthehedgeditemismorethan12months,andasacurrentassetorliabilitywhentheremainingmaturityofthehedgeditemislessthan12months.Tradingderivativesareclassifiedasacurrentassetorliability.

Fair value hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in theIncomeStatement,togetherwithanychangesinthefairvalueofthehedgedassetorliabilitythatareattributabletothehedgedrisk.TheGroupappliesfairvaluehedgeaccountingforhedgingfixedinterestriskonborrowings.Thegainor lossrelating to theeffectiveportionof interestrateswapshedgingfixedrateborrowings isrecognised intheIncomeStatementwithin‘financecost’.ThegainorlossrelatingtotheineffectiveportionisrecognisedintheIncomeStatementwithin‘othergainsorlosses–net’.ChangesinthefairvalueofthehedgedfixedrateborrowingsattributabletointerestrateriskarerecognisedintheIncomeStatementwithin‘financecost’.

Ifthehedgenolongermeetsthecriteriaforhedgeaccounting,theadjustmenttothecarryingamountofahedgeditemforwhichtheeffectiveinterestmethodisusedisamortisedtotheIncomeStatementovertheperiodtomaturity.

Cash flow hedge

Theeffectiveportionofchangesinthefairvalueofderivativesthataredesignatedandqualifiedascashflowhedgesis recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognisedimmediatelyintheIncomeStatementwithin‘othergainsorlosses–net’.

AmountsaccumulatedinequityarereclassifiedtotheIncomeStatementintheperiodswhenthehedgeditemaffectstheIncomeStatement.ThegainorlossrelatingtotheeffectiveportionofcrosscurrencyinterestrateswapshedgingfixedrateborrowingsisrecognisedintheIncomeStatementwithin‘financecost’.

When a hedging instrument matures, or when a hedge no longer meets the criteria for hedge accounting, anycumulativegainorlossexistinginequityatthattimeremainsinequityandisrecognisedwhenthehedgeditemisultimatelyrecognisedintheIncomeStatement.

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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(k) Inventories

Inventoriesarestatedatlowerofcostandnetrealisablevalue.

Cost isdeterminedonaweightedaveragebasisandcomprisesallcostsofpurchaseandothercosts incurred inbringingtheinventoriestotheirpresentlocation.Thecostoffinishedgoodsandwork-in-progresscomprisesdesigncosts,rawmaterials,directlabour,otherdirectcostsandrelatedproductionoverheads(basedonnormaloperatingcapacity).Itexcludesborrowingcosts.

Netrealisablevaluerepresentstheestimatedsellingpriceintheordinarycourseofbusiness,lessallestimatedcoststocompletionandapplicablevariablesellingexpenses.Inarrivingatthenetrealisablevalue,dueallowanceismadeforallobsoleteandslowmovingitems.

Inventories include maintenance spares acquired for the purpose of replacing damaged or faulty plant or sparesandsuppliesusedinconstructingandmaintainingthenetwork.Inventoriesalsoincludecertainitemssuchasland,capacityandnetworkequipmentsheldforresale.

(l) Non-current Assets Held for Sale

Non-currentassetsareclassifiedasheldforsalewhentheircarryingamountsaretoberecoveredprincipallythroughsaletransactionandthesaleisconsideredhighlyprobable.Theyarestatedatthelowerofcarryingamountandfairvaluelesscoststosell.

(m) Customer Acquisition Costs

Customeracquisitioncostsareincurredinactivatingnewcustomerspursuanttoacontract.Customeracquisitioncostsarecapitalisedandamortisedover thecontractperiod. In theevent thatacustomerterminatestheservicewithin the contract period, any unamortised customer acquisition costs are written off to the Income Statementimmediately.

(n) Cash and Cash Equivalents

ForthepurposeoftheStatementofCashFlows,cashandcashequivalentscomprisecashonhand,depositsheldatcallwithbanks,othershortterm,highlyliquidinvestmentswithoriginalmaturitiesof3monthsorless.Depositsheldaspledgedsecuritiesfortermloansgrantedarenotincludedascashandcashequivalents.

(o) Share Capital

(i) Classification

Ordinarysharesandnon-redeemablepreferenceshareswithdiscretionarydividendsareclassifiedasequity.Other shares are classified as equity and/or liability according to the economic substance of the particularinstrument.

Distributiontoholdersofafinancialinstrumentclassifiedasanequityinstrumentisdebiteddirectlytoequity.

(ii) Share Issue Costs

Incrementalexternalcostsdirectlyattributabletotheissuanceofnewsharesoroptionsareshowninequityasadeduction,netoftaxfromtheproceeds.

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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(o) Share Capital (continued)

(iii) Dividend to Shareholders of the Company

Dividendsonredeemablepreferencesharesarerecognisedasa liabilityandexpressedonanaccrualbasis.Otherdividendsarerecognisedasaliabilityintheperiodinwhichtheyaredeclared.

DividendinspecieofsharesdistributedtotheCompany’sshareholdersisrecordedatthecarryingvalueofnetassetdistributed.Thedistributionisrecordedasamovementinequity.

(p) Financial Liabilities

Tradeandotherpayables,customerdepositsandborrowingsareclassifiedasotherfinancialliabilities.Thesearerecognisedinitiallyatfairvalueandsubsequentlymeasuredatamortisedcostusingtheeffectiveinterestmethod.

(i) Trade Payables

Tradepayablesareobligationstopayforgoodsorservicesthathavebeenacquiredintheordinarycourseofbusinessfromsuppliers.Accountspayableareclassifiedascurrentliabilitiesifpaymentisduewithinoneyearorless(orinthenormaloperatingcycleofthebusinessiflonger).Otherwise,theyarepresentedasnon-currentliabilities.

(ii) Bonds, Notes, Debentures and Borrowings

Borrowingsarerecognisedinitiallyatfairvalue,netoftransactioncostsincurred.Borrowingsaresubsequentlycarriedatamortisedcost;anydifferencebetweenthe initial recognisedamountand theredemptionvalue isrecognisedintheIncomeStatementovertheperiodoftheborrowingsusingtheeffectiveinterestmethod,exceptforborrowingcostsincurredfortheconstructionofanyqualifyingasset.

Interests,dividends,gainsand lossesrelatingtoafinancial instrument,oracomponentpart,classifiedasaliabilityarereportedwithinfinancecostintheIncomeStatement.ForeignexchangegainsorlossesarisingfromtranslationofforeigncurrencyborrowingsarereportedwithinfinancecostintheIncomeStatement.

BorrowingsareclassifiedascurrentliabilitiesunlesstheGrouphasanunconditionalrighttodefersettlementoftheliabilityforatleast12monthsafterthereportingdate.

Borrowingcost incurred inconnectionwithfinancing theconstructionand installationofproperty,plantandequipment is capitalised until the property, plant and equipment are ready for their intended use. All otherborrowingcostsarechargedtotheIncomeStatement.

Feespaidontheestablishmentofloanfacilitiesarerecognisedastransactioncostsoftheloantotheextentthatitisprobablethatsomeorallofthefacilitywillbedrawndown.Inthiscase,thefeeisdeferreduntilthedraw-downoccurs.Totheextentthereisnoevidencethatitisprobablethatsomeorallofthefacilitieswillbedrawndown,thefeeiscapitalisedasaprepaymentforliquidityservicesandamortisedovertheperiodofthefacilitytowhichitrelates.

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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(q) Leases

(i) Finance Leases

LeasesofassetswheretheGroupassumessubstantiallyalltherisksandrewardsofownershipareclassifiedasfinanceleases.

Financeleasesarecapitalisedattheinceptionoftheleasesatthelowerofthepresentvalueoftheminimumlease payments and the fair value of the leased assets. The corresponding rental obligations, net of financecharges,areincludedinborrowings.

Eachleasepaymentisallocatedbetweenthereductionoftheliabilityandfinancechargessoastoachieveaperiodicconstantrateofinterestontheremainingbalanceoftheliability.FinancechargesarerecognisedintheIncomeStatement.

Assetsacquiredunderfinanceleasesaredepreciatedovertheshorteroftheirestimatedusefullivesortheleaseterms.

(ii) Operating Leases

Leasesofassetswhereasignificantportionoftherisksandrewardsofownershipareretainedbythelessorareclassifiedasoperatingleases.Paymentsmadeunderoperatingleases(netofanyincentivesreceivedfromthelessor)arechargedtotheIncomeStatementonastraightlinebasisovertheleaseperiod.

Whenanoperatingleaseisterminatedbeforetheleaseperiodhasexpired,anypaymentrequiredtobemadetothelessorbywayofpenaltyisrecognisedasanexpenseintheperiodinwhichterminationtakesplace.

(r) Government Grants

GrantsfromthegovernmentarerecognisedattheirfairvaluewherethereisareasonableassurancethatthegrantwillbereceivedandtheGroupwillcomplywithallattachedconditions.

GovernmentgrantsrelatingtoincomearedeferredandrecognisedintheIncomeStatementoverthefinancialperiodnecessarytomatchthemwiththecoststheyareintendedtocompensate.

Governmentgrantsrelatingtothepurchaseofassetsareincludedinnon-currentliabilitiesasdeferredincomeandarecreditedtotheIncomeStatementonastraightlinebasisovertheestimatedusefullivesoftherelatedassets.

(s) Income Taxes

Currenttaxexpenseisdeterminedaccordingtothetaxlawsofeachjurisdiction inwhichtheGroupoperatesandinclude all taxes based upon the taxable profits, including withholding taxes payable by foreign subsidiaries orassociatesondistributionsofretainedprofitstocompaniesintheGroup,andrealpropertygainstaxespayableondisposalofproperties.

Deferredtaxisrecognisedinfull,usingtheliabilitymethod,ontemporarydifferencesarisingbetweentheamountsattributedtoassetsandliabilitiesfortaxpurposesandtheircarryingamountsinthefinancialstatements.However,deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction otherthan a business combination that at the time of the transaction affects neither accounting nor taxable profit norloss.Deferredtaxisdeterminedusingtaxrates(andtaxlaws)thathavebeenenactedorsubstantiallyenactedbythereportingdateandareexpectedtoapplywhentherelateddeferredtaxassetisrealisedorthedeferredtaxliabilityissettled.

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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(s) Income Taxes (continued)

Deferredtaxassetsarerecognisedtotheextentthatitisprobablethattaxableprofitwillbeavailableinthefuture,againstwhich thedeductible temporarydifferencesorunutilised tax lossesand taxcredits (including investmentallowances)canbeutilised.

Deferredtaxisrecognisedontemporarydifferencesarisingfrominvestmentsinsubsidiariesandassociatesexceptwherethetimingofthereversalofthetemporarydifferencecanbecontrolledanditisprobablethatthetemporarydifferencewillnotreverseintheforeseeablefuture.

Deferredandincometaxassetsandliabilitiesareoffsetwhenthereisalegallyenforceablerighttooffsetcurrenttaxassetsagainstcurrenttaxliabilitiesandwhenthedeferredincometaxassetsandliabilitiesrelatetotaxesleviedbythesametaxationauthorityoneitherthetaxableentityordifferenttaxableentitieswherethereisanintentiontosettlethebalancesonanetbasis.

TheGroup’sshareofincometaxesofassociatesareincludedintheGroup’sshareofresultsofassociates.

(t) Provisions

ProvisionsarerecognisedwhentheGrouphasapresentlegalorconstructiveobligationasaresultofpastevents,whenitisprobablethatanoutflowofresourceswillberequiredtosettletheobligation,andwhenareliableestimateoftheamountcanbemade.WheretheGroupexpectsaprovisiontobereimbursed(forexample,underaninsurancecontract),thereimbursementisrecognisedasaseparateassetbutonlywhenthereimbursementisvirtuallycertain.Provisionsarenotrecognisedforfutureoperatinglosses.

Wherethereareanumberofsimilarobligations,thelikelihoodthatanoutflowwillberequiredinasettlementisdeterminedbyconsideringtheclassofobligationsasawhole.Aprovisionisrecognisedevenifthelikelihoodofanoutflowwithrespecttoanyoneitemincludedinthesameclassofobligationsmaybesmall.

Provisionsaremeasuredat thepresentvalueof theexpendituresexpected toberequired tosettle theobligationusingapre-taxratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheobligation.Theincreaseintheprovisionduetopassageoftimeisrecognisedasfinancecost.

(u) Contingent Liabilities and Contingent Assets

TheGroupdoesnotrecogniseacontingentliabilitybutdisclosesitsexistenceinthefinancialstatements.Acontingentliability is a possible obligation that arises from past events whose existence will be confirmed by occurrence ornon-occurrenceofoneormoreuncertainfutureeventsbeyondthecontroloftheGrouporapresentobligationthatisnotrecognisedbecauseitisnotprobablethatanoutflowofresourceswillberequiredtosettletheobligation.Acontingentliabilityalsoarisesintheextremelyrarecircumstancewherethereisaliabilitythatcannotberecognisedbecauseitcannotbemeasuredreliably.However,contingentliabilitiesdonotincludefinancialguaranteecontracts.

Acontingentassetisapossibleassetthatarisesfrompasteventswhoseexistencewillbeconfirmedbyoccurrenceor non-occurrence of one or more uncertain future events beyond the control of the Group. The Group does notrecogniseacontingentassetbutdiscloses itsexistencewhere inflowsofeconomicbenefitsareprobable,butnotvirtuallycertain.

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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(u) Contingent Liabilities and Contingent Assets (continued)

IntheacquisitionofsubsidiariesbytheGroupunderabusinesscombination,thecontingentliabilitiesassumedaremeasuredinitiallyattheirfairvaluesattheacquisitiondate,irrespectiveoftheextentofanynon-controllinginterest.

TheGrouprecognisesseparatelythecontingentliabilitiesoftheacquireesaspartofallocatingthecostofabusinesscombinationwheretheirfairvaluescanbemeasuredreliably.Wherethefairvaluescannotbemeasuredreliably,theresultingeffectwillbereflectedinthegoodwillarisingfromtheacquisitions.

Subsequenttotheinitialrecognition,theGroupmeasuresthecontingentliabilitiesthatarerecognisedseparatelyatthedateofacquisitionatthehigheroftheamountthatwouldberecognisedinaccordancewiththeprovisionsofMFRS137andtheamountinitiallyrecognisedless,whenappropriate,cumulativeamortisationrecognisedinaccordancewithMFRS118.

(v) Revenue Recognition

Operatingrevenuecomprisesthefairvalueoftheconsiderationreceivedorreceivablesforthesaleofproductsandrenderingofservicesnetofreturns,duties,salesdiscountsandsalestaxespaid,aftereliminatingsaleswithintheGroup.Operatingrevenue isrecognisedoraccruedat the timeof theprovisionofproductsorservices,when theamountofrevenuecanbereliablymeasuredanditisprobablethatfutureeconomicbenefitswillflowtotheGroup.

Advancerentalbillingcomprisesmainlybillinginadvancefordataservices,whichisamortisedonastraightlinebasisaccordingtocontractualterms.

Dividend income from investment in subsidiaries, associates and equity investments is recognised within ‘otheroperatingincome(net)’whenarighttoreceivepaymentisestablished.

Finance income includes income from deposits with licensed banks, other financial institutions, other deposits,available-for-salereceivablesandstaffloans,andisrecognisedusingtheeffectiveinterestmethod.

(w) Employee Benefits

(i) Short Term Employee Benefits

Wages,salaries,paidannualleaveandsickleave,bonusesandnon-monetarybenefitsareaccruedintheperiodinwhichtheassociatedservicesarerenderedbyemployeesoftheGroup.

(ii) Defined Contribution Plans

TheGroup’scontributionstodefinedcontributionplansarechargedtotheIncomeStatementintheperiodtowhichtheyrelate.Oncethecontributionshavebeenpaid,theGrouphasnofurtherpaymentobligations.Prepaidcontributionsarerecognisedasanassettotheextentthatacashrefundorareductioninthefuturepaymentsisavailable.

(iii) Termination Benefits

Termination benefits are payable whenever an employee’s employment is terminated before the normalretirementdateorwheneveranemployeeacceptsvoluntary redundancy inexchange for thesebenefits.TheGrouprecognisesterminationbenefitswhenitisdemonstrablycommittedtoeitherterminatetheemploymentofcurrentemployeesaccordingtoadetailedformalplanwithoutpossibilityofwithdrawalortoprovideterminationbenefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12monthsafterthereportingdatearediscountedtopresentvalue.

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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(x) Foreign Currencies

(i) Functional and Presentation Currency

ItemsincludedinthefinancialstatementsofeachoftheGroup’sentitiesaremeasuredusingthecurrencyoftheprimaryeconomicenvironmentinwhichtheentityoperates(thefunctionalcurrency).TheconsolidatedfinancialstatementsarepresentedinRinggitMalaysia,whichistheCompany’sfunctionalandpresentationcurrency.

(ii) Transactions and Balances

Foreigncurrencytransactionsaretranslatedintothefunctionalcurrencyusingtheexchangeratesprevailingat the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of suchtransactionsandfromthetranslationatyearendexchangeratesofmonetaryassetsandliabilitiesdenominatedin foreigncurrenciesarerecognised in the IncomeStatement,exceptwhendeferred inothercomprehensiveincomeasqualifyingcashflowhedges.

Foreign exchange gains and losses that relate to borrowings are presented in the Income Statement within‘netfinancecost’.Allotherforeignexchangegainsandlossesarepresented intheIncomeStatementwithin‘operatingcosts’.

(iii) Group Companies

TheresultsandfinancialpositionofalltheGroupentities(noneofwhichhasthecurrencyofahyperinflationaryeconomy) that have a functional currency different from the presentation currency are translated into thepresentationcurrencyasfollows:

• assetsandliabilitiesforeachStatementofFinancialPositionpresentedaretranslatedattheclosingrateatthereportingdate;

• incomeandexpenses foreach IncomeStatementare translatedataverageexchangerates (unless thisaverageisnotareasonableapproximationofthecumulativeeffectoftheratesprevailingonthetransactiondates, in which case income and expenses are translated using the rates prevailing on the date of thetransactions);and

• allresultingexchangedifferencesarerecognisedasaseparatecomponentinothercomprehensiveincome.

Onconsolidation,exchangedifferencesarisingfromthetranslationofthenetinvestmentinforeignoperationsare taken to other comprehensive income. When a foreign operation is disposed of or sold, such exchangedifferencesthatwererecordedinequityarerecognisedintheIncomeStatementaspartofthegainorlossondisposal.

(y) Segment Reporting

Operatingsegmentsarereportedinamannerconsistentwiththeinternalreportingprovidedtothechiefoperatingdecision-makers. The chief operating decision-makers are responsible for allocating resources and assessingperformanceoftheoperatingsegmentsandmakeoverallstrategicdecisions.

FurtherdisclosuresonSegmentReportingaresetoutinnote43tothefinancialstatements.

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3. CRITICAL ACCOUNTING ESTIMATES EstimatesarecontinuallyevaluatedbytheDirectorsandarebasedonhistoricalexperienceandotherfactors,including

expectationsoffutureeventsthatarebelievedtobereasonableunderthecircumstances.

Critical Accounting Estimates and Assumptions

TheGroupmakesestimatesandassumptionsconcerningthefuture.Theresultingaccountingestimateswill,bydefinition,rarelyequaltherelatedactualresults.Toenhancetheinformationcontentoftheestimates,certainkeyvariablesthatareanticipatedtohavematerialimpacttotheGroup’sresultsandfinancialpositionaretestedforsensitivitytochangesintheunderlyingparameters.Theestimatesandassumptionsthathaveasignificantriskofcausingamaterialadjustmenttothecarryingamountsofassetsandliabilitieswithinthenextyeararementionedbelow.

(a) Estimated Useful Lives of Property, Plant and Equipment

The Group reviews annually the estimated useful lives of property, plant and equipment based on factors suchas business plan and strategies, expected level of usage, changes in technology, latest findings in researchand development, updated practices to enhance performance of certain network assets and future technologicaldevelopments.Futureresultsofoperationscouldbemateriallyaffectedbychangesintheseestimatesbroughtaboutbychangesinthefactorsmentioned.Achangeintheestimatedusefullivesofproperty,plantandequipmentwouldchangetherecordeddepreciationandthecarryingamountofproperty,plantandequipment.

(b) Impairment of Property, Plant and Equipment, Intangible Assets (other than goodwill) and Investment in Subsidiaries

TheGroupassessesimpairmentoftheassetsmentionedabovewhenevertheeventsorchangesincircumstancesindicatethatthecarryingamountofanassetmaynotberecoverablei.e.thecarryingamountoftheassetismorethantherecoverableamount.Recoverableamountismeasuredatthehigherofthefairvaluelesscosttosellforthatassetanditsvalue-in-use.Thevalue-in-useisthenetpresentvalueoftheprojectedfuturecashflowderivedfromthatassetdiscountedatanappropriatediscountrate.

ProjectedfuturecashflowsarebasedontheGroup’sestimatescalculatedbasedonhistorical,sectorandindustrytrends,generalmarketandeconomicconditions,changesintechnologyandotheravailableinformation.

(c) Impairment of Goodwill

TheGrouptestsgoodwill for impairmentannually inaccordancewith itsaccountingpolicyorwhenevereventsorchanges in circumstances indicate that this is necessary. The assumptions used, results and conclusion of theimpairmentassessmentarestatedinnote23tothefinancialstatements.

(d) Impairment of Trade Receivables

The Group assesses at each reporting date whether there is objective evidence that trade receivables have beenimpaired.Impairmentlossiscalculatedperiodicallybasedonareviewofthecurrentstatusofexistingreceivablesandhistoricalcollectiontrendstoreflecttheactualandanticipatedexperience.

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3. CRITICAL ACCOUNTING ESTIMATES (CONTINUED) Critical Accounting Estimates and Assumptions (continued)

(e) Taxation

(i) Income Taxes

TheGroupissubjecttoincometaxesinnumerousjurisdictions.Judgmentisinvolvedindeterminingthegroup-wideprovision for income taxes.Therearecertain transactionsandcomputations forwhich theultimate taxdetermination is uncertain during the ordinary course of business. The Group recognises liabilities for taxmattersbasedonestimatesofwhetheradditionaltaxeswillbedue.Ifthefinaloutcomeofthesetaxmattersresult inadifference in theamounts initially recognised,suchdifferenceswill impact the incometaxand/ordeferredtaxprovisionsintheperiodinwhichsuchdeterminationismade.

(ii) Deferred Tax Assets

Deferredtaxassetisrecognisedtotheextentthatitisprobablethatfuturetaxableprofitwillbeavailableagainstwhichtemporarydifferencesorunutilisedtaxlossesandtaxcredits(includinginvestmentallowances)canbeutilised.Thisinvolvesjudgmentregardingfuturetaxableprofitsofaparticularentityinwhichthedeferredtaxassethasbeenrecognised.

Estimating the future taxable profits involved significant assumptions, especially in respect of demand onexistingandnewservices,competitionandregulatorychangesthatmayimpactthepricingofservices.Theseassumptionswerederivedbasedonpastperformanceandadjustedfornon-recurringcircumstances.

Duringthecurrentfinancialyear,theCompanyhasrecogniseddeferredtaxassetsarisingfromunutilisedtaxincentiveasdisclosedinnote19tothefinancialstatements.

(f) Contingent Liabilities

DeterminationofthetreatmentofcontingentliabilitiesisbasedonDirectors’viewoftheexpectedoutcomeofthecontingenciesafterconsultinglegalcounselforlitigationcasesandexpertsinternalandexternaltotheGroupformattersintheordinarycourseofbusiness.DetailsofthelegalproceedingsinwhichtheGroupisinvolvedasat31December2012isdisclosedinnote48tothefinancialstatements.

(g) Fair Value of Derivatives and Other Financial Instruments

The fair value of financial instruments that are not traded in an active market (for example, over-the-counterderivatives)isdeterminedbyusingvaluationtechniques.TheGroupexercisesitsjudgmentinselectingavarietyofvaluationmethodsandmakesassumptionsthataremainlybasedonmarketconditionsexistingattheendofeachreportingperiod.Thefairvalueofderivativesisthepresentvalueoftheirfuturecashflows.TheGroupestimatedthefairvaluesatthereportingdate,ofcertainavailable-for-salefinancialassetsthatarenottradedinanactivemarketbyusingthenettangibleassetsandthediscountedcashflowmethods.AlthoughtheGroupandtheCompanybelievethatestimatesoffairvalueareappropriate,theuseofdifferentmethodologiesorassumptionscouldleadtodifferentmeasurementsoffairvalue.

Thesummaryoffinancialinstrumentsbycategoryisdisclosedinnote44tothefinancialstatements.Thevaluationofsuchfinancialinstrumentsisfurtherdiscussedinnote45tothefinancialstatements.

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4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES(a) Financial Risk Factor

ThemainrisksarisingfromtheGroup’sfinancialassetsandliabilitiesaremarketrisk(comprisesforeignexchangerisk,priceriskandinterestraterisk),creditriskandliquidityrisk.TheGroup’soverallriskmanagementseekstominimisepotentialadverseeffectsoftheserisksonthefinancialperformanceoftheGroup.

TheGrouphasestablishedriskmanagementpolicies,guidelinesandproceduresinordertomanageitsexposuretothesefinancialrisks.Hedgingstrategiesaredeterminedinlightofcommercialcommitmentstomitigatetherelevantrisksexposures.Derivativefinancialinstrumentsareusedtohedgetheunderlyingcommercialexposuresandarenotheldforspeculativepurposes.

(i) Market Risk

• ForeignExchangeRisk

The Group’s foreign exchange risk refers to adverse exchange rate movements on foreign currencypositionsoriginatingfromtradereceivablesandpayables,depositsandborrowingsdenominatedinforeigncurrencies,andfromretainedprofitsinoverseassubsidiaries,wherethefunctionalcurrenciesarenotinRinggitMalaysia.

TheGroup’sobjectiveistomitigateforeignexchangeexposuretoanacceptablelevelagainstpre-determinedlimitsandimpacttotheIncomeStatement.TheGroupmonitorsitsforeigncurrencydenominatedassetsandliabilitiesandusesvarioushedginginstrumentssuchasforwardcontracts,CrossCurrencyInterestRateSwapscontracts(CCIRS)andoptionstructuresaswellasmaintainingfundsinforeigncurrenciesatappropriatelevelstosupportoperatingcashflowsrequirement.TheGroup’spolicyrequiresalltransactionsforhedgingforeigncurrencyexchangeriskexposurebeexecutedwithintheparametersapprovedbytheBoardofDirectors.

The foreign exchange risk of the Group arises predominantly from borrowings denominated in foreigncurrencies,mainlytheUSDollarandJapaneseYen.Duringthefinancialyear, inadditiontotheexistingUSDollarforwardcontracts,theGroupenteredintoforwardcontractandCCIRStohedgeselectedUSDborrowingsandJapaneseYenborrowingsrespectivelyinordertoreduceforeigncurrencyexposures.Afterhedgingof theUSDollarandJapaneseYenborrowings, the foreigncurrencyborrowingscomposition isreduced to20.8% (2011:28.0%)of theGroup’s totalborrowingsasat31December2012.Therewasnorepaymentoftheseforeigncurrencyborrowingsduringthefinancialyear.

Based on the borrowings position as at 31 December 2012, if the Ringgit Malaysia had weakened/strengthenedby5.0%againsttheUSDollarandJapaneseYenwithallothervariablesheldconstant,thepost-taxprofitforthefinancialyearfortheGroupwouldhavebeenlower/higherbyapproximatelyRM130.7million(beforehedging)andRM74.2million(afterhedging)asaresultofforeignexchangelossesorgainsontranslationofUSDollarandJapaneseYendenominatedborrowings.

• PriceRisk

TheGroupisexposedtoequityandfixedincomesecuritiespriceriskarisingfrominvestmentsasreflectedontheStatementofFinancialPosition,classifiedeitherasavailable-for-saleoratfairvaluethroughprofitorloss.TheGroupisnotexposedtocommoditypricerisk.Toreduceitspriceriskarisingfrominvestmentsin equity securities, the Group continues to wind down its quoted equity securities portfolio duringthefinancialyearwhichhasreducedfromRM20.1millionattheendof2011toRM16.5millionattheendof2012.

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4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)(a) Financial Risk Factor (continued)

(i) Market Risk (continued)

• PriceRisk(continued)

Basedon thequotedequitysecuritiesportfolioasat31December2012, ifBursaMalaysiaequity indexmoveby5.0%,withallothervariablesremainconstant,post-taxprofitforthefinancialyearwouldhavebeen impacted by approximately RM0.8 million. Post-tax profit for the financial year would increase ordecreaseasaresultofgain/lossesonequitysecuritiesclassifiedasfairvaluethroughprofitorloss.Movingforward,the impactwill furtherreducetocommensuratewitheffortsmadetowardsthetotalclosureofequityportfolio.

Othercomponentsofequitywouldincrease/decreaseasaresultofgains/lossesonequityandfixedincomesecuritiesclassifiedasavailable-for-sale.

• InterestRateRisk

TheGrouphascashandshorttermdepositsandfixedincomesecuritiesthatareexposedtointerestratemovement.TheGroupmanagesitsinterestrateriskoncashandshorttermdepositsthroughallocationinsuitabletenure.Whileonfixed incomesecurities, theGroupappliessuitabledurationandbasispointvaluationanalysisimpacttomanageitsinterestraterisk.

The Group’s investments in money market and fixed income securities as at 31 December 2012 wereRM3,262.4million(2011:RM3,577.1million)andRM500.6million(2011:RM418.1million)respectively.Foranincreaseof25basispointsintheOvernightPolicyRate(OPR)byBankNegaraMalaysiaandassumingtheoverallyieldcurvealsoincreasesbythesamepercentage,thefinanceincomefromthemoneymarketportfoliowouldcorrespondinglymovebyapproximatelyRM8.2millionwhilethenetassetvalueofthefixedincomeportfoliowouldinverselymovebyapproximatelyRM4.2million.

TheGroup’sdebtsincluderevolvingcredits,borrowings,bonds,notesanddebentures.TheGroup’sobjectiveistomanagetheinterestraterisktoanacceptablelevelofexposureonthefinancecost.TheGroupreviewsitscompositionoffixedandfloatingratedebtbasedonassessmentofitsexistingexposureanddesirableinterestrateprofileacceptabletotheGroup.Hedginginstrumentssuchasinterestrateswapsareusedtomanagetheserisks.

TheGroup’spolicyrequiresalltransactionsforhedginginterestrateriskexposurebeexecutedwithintheparametersapprovedbytheBoardofDirectors.

TheGrouphasenteredintoafewinterestrateswaptransactionswithcreditworthyfinancialinstitutions.Basedonthehedgingpositionasat31December2012,ifthereweretobeahikeintheOPRby25basispoints,thefinancecostwouldbehigherbyapproximatelyRM2.5million.

Asat31December2012,theGroup’sfixed-to-floatinginterestrateprofile,afterhedging,was71:29(2011:69:31).

Theinterestrateexposureismitigated,tosomeextent,bytheoffsettingeffectbetweenassetsandliabilities.

276





(ii) Credit Risk

Financialassetsthatareprimarilyexposedtocreditrisksarereceivables,cashandbankbalances,marketablesecuritiesandfinancialinstrumentsusedinhedgingactivities.

DuetothenatureoftheGroup’sbusiness,customersaremainlysegregatedaccordingtobusinesssegments.TheGrouphasnosignificantconcentrationofcreditriskduetoitsdiversecustomerbase.Creditriskismanagedthrough the application of stringent credit control assessment and approval, credit limit and monitoringprocedures.Whereappropriate,theGroupobtainsdepositsorbankguaranteesfromcustomerstobeheldascollaterals.

The Group places its cash and cash equivalents with various creditworthy financial institutions. The Group’spolicylimitstheconcentrationofcreditexposuretoanysinglefinancialinstitutionbasedonitsnettangibleassetpositionand/orcreditrating,whichissubjecttoannualreview.

TheGrouphasappointedseveralfixedincomeandcommercialpapersfundmanagerstomanageitsinvestmentportfolios.Inmanagingtheportfolios’creditrisks,theinvestmentparameterwasestablishedtorestrictallfundmanagerstoonlyinvestinsecuritiesthatcarryatleastA3/P1creditratingsorequivalent.Thisisinaccordancewith the Group’s Treasury Investment Policies and Guidelines. In the current financial year, the Group’sinvestmentportfolioswerepredominantlysecuritiescarryingAA/P1creditratingsorabove,asshowninnote27tothefinancialstatements.

AllhedginginstrumentsareexecutedwithcreditworthyfinancialinstitutionswithaviewtolimitingthecreditriskexposureoftheGroup.TheGroup,however,isexposedtocredit-relatedlossesintheeventofnon-performancebycounterpartiestofinancialderivativeinstruments,butdoesnotexpectanycounterpartiestofailtomeettheirobligations.

Incomplyingwiththeriskmanagementpolicies,allcounterpartiesarerequiredtomaintaincertaincreditratingasdefinedbytheinternationalandlocalratingagencies.

(iii) Liquidity Risk

GroupTreasurymaintainscashandcashequivalentsatalevelthatisdeemedappropriatebythemanagementtofinancetheGroup’soperations.ItalsoactivelymonitorsandcontrolsliquidityriskexposuresandfundingneedsacrosslegalentitieswithintheGroup,businesslinesandcurrencies,takingintoaccountlegal,regulatoryandoperationallimitationsviaacentralisedTreasuryoperation.

Duetothedynamicnatureoftheunderlyingbusiness,theGroupalsoaimsatmaintainingflexibilityinfundingbykeepingbothcommittedanduncommittedcreditlinesavailable.

CashflowforecastsareperformedintheoperatingentitiesoftheGrouponarollingbasisandareaggregatedbyGroupTreasurytoensuresufficientcashisavailabletomeetoperationalneedswhilemaintainingadequateheadroom on its undrawn committed credit facilities at all times. As at 31 December 2012, the Group helddepositswithfinancialinstitutionsofRM3,262.4million(2011:RM3,577.1million)andcashandbankbalancesofRM476.3million(2011:RM635.9million)thatareexpectedtobereadilyavailabletomeetanypaymentobligationwhenitfallsdue.

277





(iii) Liquidity Risk (continued)

Refinancingriskismanagedbylimitingtheamountofborrowingsthatmaturewithinanyspecificperiodandbyhavingappropriatestrategiesinplacetomanagerefinancingneedsastheyarise.TheGrouphasaRM2,000.0milliondebtmaturinginDecember2013andthisobligationwillbepaidviaacombinationofinternalcashflowandnewborrowings.TheanalysisofthematurityprofileoftheGroup’sandtheCompany’sfinancialliabilitiesareshowninnote47tothefinancialstatements.

TherehasbeennosignificantchangeintheGroup’sfinancialriskmanagementobjectivesandpoliciesaswellasitsfinancialriskexposureinthecurrentfinancialyearascomparedtotheprecedingfinancialyear.

(b) Capital Risk Management

TheGroup’sobjectiveswhenmanagingcapitalaretosafeguardtheGroup’sabilitytocontinueasagoingconcerninordertoprovidelongtermreturntoshareholdersandbenefitsforotherstakeholders.TheGroup’scapitalmanagementframeworkcomprisesofadividendpolicyandstrivestomaintainanoptimalcapitalstructurethatwillimproveitscapitalefficiency.

Inordertomaintainoradjustthecapitalstructure,theGroupmayadjusttheamountofdividendstobepaidtotheshareholdersormayreturncapitaltoshareholdersvis-à-visitsdebt-to-equityratio(gearinglevel).Thegearingratiosasat31Decemberwereasfollows:

The Group

2012 2011

Borrowings(RMmillion)(note16) 7,140.4 6,410.4TotalShareholders’Equity(RMmillion) 6,894.8 7,424.0Debt-to-equityRatio 1.0 0.9

Theincreaseinthegearingratioasat31December2012isprimarilyduetoadditionalborrowingsdrawndownduringthefinancialyear.

TheGroupalsomonitorsitsgearinglevelincomparisontoitspeerswithintheindustrywhilemaintainingthedesiredlevelofcreditrating.During2012,theGroup’screditratingremainedunchangedatAAAbyRAM,A–byS&PandA3byMoody’s.

Furthermore,theGroupcomplieswithBursaMalaysiaSecuritiesBerhadMainMarketListingRequirementPracticeNoteNo.17/2005tomaintainaconsolidatedshareholders’equityofmorethan25percentoftheissuedandpaidupcapitalandmaintainsuchshareholders’equityatnotlessthanRM40.0million.

278




5. OPERATING REVENUE


2012RM

2011RM

2012RM

2011RM

Voiceservices 3,706.0 3,733.9 3,687.5 3,731.8Dataservices 2,204.8 2,013.3 1,869.2 1,755.6Internetandmultimediaservices 2,371.9 2,001.1 2,381.9 2,009.9Othertelecommunicationsrelatedservices 1,328.7 1,110.2 907.0 679.2Non-telecommunicationsrelatedservices 382.1 292.2 – –

TOTAL OPERATING REVENUE 9,993.5 9,150.7 8,845.6 8,176.5

6(a) DEPRECIATION, IMPAIRMENT AND AMORTISATION


2012RM

2011RM

2012RM

2011RM

Depreciationofproperty,plantandequipment(PPE) 1,997.7 2,015.5 1,819.7 1,853.6Depreciationofinvestmentproperty 0.1 – 2.2 2.1ImpairmentofPPE 0.3 0.2 – –Writeoff/retirementofPPE 28.4 97.4 25.2 95.1Amortisationofintangibleassets 18.2 14.9 – –

TOTAL DEPRECIATION, IMPAIRMENT AND AMORTISATION 2,044.7 2,128.0 1,847.1 1,950.8

279




6(b) OTHER OPERATING COSTS


2012RM

2011RM

2012RM

2011RM

Agencycommissionsandcharges 79.5 57.0 136.0 103.4Domesticinterconnectandinternationaloutpayment 829.7 757.6 877.7 802.4Impairmentoftradeandotherreceivables(netofdebt

recoveries) 63.6 72.8 66.9 104.0Impairmentofaninvestmentinasubsidiary – – – 76.0Impairmentreversalforavailable-for-salereceivables (1.2) (1.2) (1.2) (1.2)Maintenance 860.6 602.1 897.4 646.5Marketing,advertisingandpromotion 342.7 360.0 368.0 369.1Net(gain)/lossonforeignexchangeonsettlementsand

placements–realised (4.7) 15.0 (5.8) 15.7–unrealised 7.2 6.9 3.5 9.9Outsourcingcosts 84.5 87.2 325.7 361.2Rental–equipment 76.7 87.0 120.2 109.2Rental–landandbuildings 160.5 158.4 126.8 133.8Rental–leasedlines 175.5 130.8 – –Rental–others 22.3 15.8 13.0 12.6Researchanddevelopment 5.1 5.3 67.2 58.6Staffcosts 2,129.1 1,966.0 1,657.6 1,510.2StaffcostscapitalisedintoPPE (104.6) (92.9) (104.6) (92.9)Suppliesandinventories 644.6 603.0 500.7 450.9Transportationandtravelling 73.7 68.4 59.2 54.5UniversalServiceProvisioncontribution 275.4 245.6 258.1 233.6Utilities 324.2 299.5 287.2 264.9Others 882.9 740.9 729.9 582.9

TOTAL OTHER OPERATING COSTS 6,927.3 6,185.2 6,383.5 5,805.3

280




6(b) OTHER OPERATING COSTS (CONTINUED)


2012RM

2011RM

2012RM

2011RM

Staffcostsinclude:–salaries,allowances,overtimeandbonus 1,743.4 1,614.4 1,349.7 1,232.1–terminationbenefit – 5.7 – 5.7–contributiontoEmployeesProvidentFund(EPF) 253.4 224.5 197.8 175.0–otherstaffbenefits 126.0 115.1 104.2 91.3–remunerationofExecutiveDirectorsoftheCompany

–salaries,allowancesandbonus 3.1 4.0 3.1 4.0–contributiontoEPF 0.6 0.7 0.6 0.7

–remunerationofNon-ExecutiveDirectorsoftheCompany–fees 2.2 1.2 1.9 1.0–allowancesandbonus 0.4 0.3 0.3 0.3

–remunerationofformerNon-ExecutiveDirectorsoftheCompany–fees – 0.1 – 0.1

Othersinclude:–statutoryauditfees

–PricewaterhouseCoopersMalaysia 2.9 2.4 1.9 1.6–memberfirmsofPricewaterhouseCoopersInternational

Limited 0.2 0.2 – ––auditrelatedfees 0.8 0.6 0.4 0.4–taxandothernon-auditservices 0.2 0.9 0.2 0.6

EstimatedmoneyvalueofbenefitsofDirectorsamountedtoRM582,686(2011:RM686,886)fortheGroupandtheCompany.

281




7. OTHER OPERATING INCOME (net)


2012RM

2011RM

2012RM

2011RM

Dividendincomefromsubsidiaries – – 116.3 101.4Dividendincomefromequitysecurities–quoted 1.2 11.7 1.2 1.5 –unquoted 0.1 6.2 0.1 6.2Gain/(Loss)ondisposalofaformersubsidiary – 0.8 – (0.3)Incomefromsalesofscraps 12.7 10.1 12.7 10.1Incomefromsubsidiaries–interest – – 10.8 11.4 –others – – 4.8 4.9Insuranceclaims 1.0 2.5 1.0 2.4Lossondisposalofstaffloans (0.6) (1.2) (0.6) (1.2)ProfitondisposalofPPE 5.5 8.6 5.7 8.4Profitondisposalofnon-currentassetheldforsale 13.6 – 13.6 –Penaltyonbreachofcontract 15.8 8.9 15.8 8.4Rentalincomefromlandandbuildings 44.1 43.6 63.2 69.1Rentalincomefromvehicles – 1.6 1.2 3.2Revenuefromtrainingandrelatedactivities 1.5 1.2 2.2 2.1Others 70.5 26.9 44.0 35.1

TOTAL OTHER OPERATING INCOME (net) 165.4 120.9 292.0 262.7

8. OTHER GAINS (net)


2012RM

2011RM

2012RM

2011RM

Financialassetsatfairvaluethroughprofitorloss–fairvalueloss (3.0) (0.7) (3.0) (0.7)Available-for-saleinvestments–reclassificationfromfairvaluereserves(sub-note(a)) 3.3 287.2 3.3 3.7

TOTAL OTHER GAINS (net) 0.3 286.5 0.3 3.0

282




8. OTHER GAINS (net) (CONTINUED)(a) SignificantdisposalofinvestmentinAxiataGroupBerhad(Axiata)duringthefinancialyearended31December2011

On2December2010,theCompanyannouncedtheproposaltoundertakethedisposalviaTMESOSManagementSdnBhd(TEM),awhollyownedsubsidiary,ofupto191,458,007Axiatashares(representingapproximately2.27%equityinterestinAxiata),beingtheremainingunexercisedshareoptionsandexcessunallocatedsharesheldbyTEM.TEMisthetrusteeforSpecialESOS,anEmployees’ShareOptionSchemewhichhadexpiredon16September2010.

Theproposeddisposalwastobesatisfiedentirelybycashandundertakenthroughthefollowingmodes:

(i) privateplacementsviaabookbuildingprocesstoeligiblethird-partyinstitutional/sophisticatedinvestors;and/or(ii) openmarketdisposals.

On26July2011,theCompany,viaTEM,completedthebookbuildingexercisefor92.4millionAxiatasharestosuccessfulthird-partyinstitutionalinvestorsatapriceofRM5.07perAxiatashare.Inaddition,therewerealsodisposalsof9.1millionAxiatasharesintheopenmarket.TheabovedisposalsresultedinagainofRM283.5millionandanetcashinflowofRM513.8million.

The Group

2011RM

Netproceed 513.8Carryingamount(note27) (513.8)ReclassificationadjustmentonfairvaluegainfromreservetotheIncomeStatement 283.5

Gainondisposal 283.5

283




9. NET FINANCE (COST)/INCOME

2012 2011

The Group Foreign

RMDomestic

RM

IslamicPrinciples

RMTotal

RMForeign

RMDomestic

RM

IslamicPrinciples

RMTotal

RM

Financeincomefrom–shorttermbankdeposits 0.6 65.5 66.7 132.8 # 75.9 51.5 127.4–otherdeposits – 0.8 1.5 2.3 – – 1.4 1.4–staffloans – 1.0 1.9 2.9 – 0.4 2.0 2.4–available-for-salereceivables – 1.6 – 1.6 – 1.8 – 1.8

TOTAL FINANCE INCOME 0.6 68.9 70.1 139.6 # 78.1 54.9 133.0

Financecoston–borrowings (147.0) – – (147.0) (147.8) (0.8) – (148.6)–TMIslamicStapledIncomeSecurities

(note16(a)) – – (162.3) (162.3) – – (163.2) (163.2)–fairvaluegainoninterestrateswaps-realised(note16(b)) – – 7.1 7.1 – – 8.4 8.4–IslamicCommercialPapers(note16(c)) – – (1.9) (1.9) – – (0.7) (0.7)–IslamicMediumTermNotes(note16(c)) – – (40.4) (40.4) – – (10.2) (10.2)–accretionoffinancecost(note16(d)) – (7.7) – (7.7) – (7.3) – (7.3)–financelease(note16(e)) – (3.5) – (3.5) – (3.8) – (3.8)–amortisationofinterestsubsidyon

staffloan – – (0.5) (0.5) – (1.7) (0.5) (2.2)Borrowingcostscapitalised – 7.7 17.0 24.7 – 7.3 2.1 9.4

TOTAL FINANCE COST (147.0) (3.5) (181.0) (331.5) (147.8) (6.3) (164.1) (318.2)

Foreignexchangegain/(loss)onborrowings

–unrealised 109.5 – – 109.5 (66.2) – – (66.2)–reclassificationfromhedgingreserve (29.7) – – (29.7) 3.7 – – 3.7Fairvalue(loss)/gainonforwardforeign

currencycontracts–unrealised(note18) (6.4) – – (6.4) 3.9 – – 3.9

TOTAL FOREIGN ExCHANGE GAIN/(LOSS) ON BORROWINGS 73.4 – – 73.4 (58.6) – – (58.6)

NET FINANCE (COST)/INCOME (73.0) 65.4 (110.9) (118.5) (206.4) 71.8 (109.2) (243.8)

# AmountlessthanRM0.1million

284




9. NET FINANCE (COST)/INCOME (CONTINUED)

2012 2011

The Company Foreign

RMDomestic

RM

IslamicPrinciples

RMTotal

RMForeign

RMDomestic

RM

IslamicPrinciples

RMTotal

RM

Financeincomefrom–shorttermbankdeposits 0.1 62.6 63.2 125.9 # 68.8 47.0 115.8–otherdeposits – 0.8 1.5 2.3 – – 1.4 1.4–staffloans – 1.0 1.9 2.9 – 0.4 2.0 2.4–available-for-salereceivables – 1.6 – 1.6 – 1.8 – 1.8

TOTAL FINANCE INCOME 0.1 66.0 66.6 132.7 # 71.0 50.4 121.4

Financecoston–borrowings (147.0) (0.2) – (147.2) (147.8) (0.2) – (148.0)–TMIslamicStapledIncomeSecurities

(note16(a)) – – (162.3) (162.3) – – (163.2) (163.2)–fairvaluegainoninterestrateswaps-realised(note16(b)) – – 7.1 7.1 – – 8.4 8.4–IslamicCommercialPapers(note16(c)) – – (1.9) (1.9) – – (0.7) (0.7)–IslamicMediumTermNotes(note16(c)) – – (40.4) (40.4) – – (10.2) (10.2)–accretionoffinancecost(note16(d)) – (7.7) – (7.7) – (7.3) – (7.3)–financelease(note16(e)) – (3.5) – (3.5) – (3.8) – (3.8)–Inter-CompanyFundOptimisation

(note41(f)) – (8.6) – (8.6) – (7.4) – (7.4)–amortisationofinterestsubsidyon

staffloan – – (0.5) (0.5) – (1.7) (0.5) (2.2)Borrowingcostscapitalised – 7.7 17.0 24.7 – 7.3 2.1 9.4

TOTAL FINANCE COST (147.0) (12.3) (181.0) (340.3) (147.8) (13.1) (164.1) (325.0)

Foreignexchangegain/(loss)onborrowings

–unrealised 109.5 – – 109.5 (66.2) – – (66.2)–reclassificationfromhedgingreserve (29.7) – – (29.7) 3.7 – – 3.7Fairvalue(loss)/gainonforwardforeign

currencycontracts–unrealised(note18) (6.4) – – (6.4) 3.9 – – 3.9

TOTAL FOREIGN ExCHANGE GAIN/(LOSS) ON BORROWINGS 73.4 – – 73.4 (58.6) – – (58.6)

NET FINANCE (COST)/INCOME (73.5) 53.7 (114.4) (134.2) (206.4) 57.9 (113.7) (262.2)


285




10. TAxATION AND ZAKAT


2012RM

2011RM

2012RM

2011RM

ThetaxationchargefortheGroupandtheCompanycomprise:Malaysia Income TaxCurrentyear 72.8 44.8 25.2 4.0Prioryear 19.3 (254.1) 26.7 (240.6) Deferred Tax (net) (341.3) (39.3) (362.1) (56.8)

(249.2) (248.6) (310.2) (293.4)Overseas Income TaxCurrentyear 4.8 5.1 – –Prioryear 0.3 1.2 – – Deferred Tax (net) 5.5 (0.1) – –

10.6 6.2 – –

TOTAL TAxATION (238.6) (242.4) (310.2) (293.4)Zakat 2.3 6.5 2.2 6.1

TAxATION AND ZAKAT (236.3) (235.9) (308.0) (287.3)

Current taxationCurrentyear 77.6 49.9 25.2 4.0Under/(Over)accrualinprioryears(net) 19.6 (252.9) 26.7 (240.6)Deferred taxationOriginationandreversaloftemporarydifferences 150.4 299.8 119.1 278.8Taxincentive(note19) (481.2) (335.6) (481.2) (335.6)

Benefitfrompreviouslyunrecognisedtaxlossesanddeductibletemporarydifferences (5.0) (3.6) – –

(238.6) (242.4) (310.2) (293.4)

286




10. TAxATION AND ZAKAT (CONTINUED)TherelationshipbetweentaxationandprofitbeforetaxationandzakatcanbeexplainedbythenumericalreconciliationbetweentaxationexpenseandtheproductofaccountingprofitmultipliedbytheMalaysiantaxrateasfollows:


2012RM

2011RM

2012RM

2011RM

ProfitBeforeTaxationandZakat 1,069.6 1,001.2 773.1 423.9

TaxationcalculatedattheapplicableMalaysiantaxationrateof25.0% 267.4 250.3 193.3 106.0

Taxeffectsof:–differenttaxationratesinothercountries (0.5) (1.8) – ––expensesnotdeductiblefortaxationpurposes 24.6 71.0 14.5 75.9–incomenotsubjecttotaxation (56.7) (120.3) (52.2) (25.7)–expensesallowedfordoublededuction (16.8) (14.7) (16.8) (14.7)–taxincentive (481.2) (335.6) (481.2) (335.6)–benefitfrompreviouslyunrecognisedtaxlossesand

deductibletemporarydifferences (5.0) (3.6) – ––currentyeartaxlossesnotrecognised – 12.6 – ––under/(over)accrualofincometax(net) 19.6 (252.9) 26.7 (240.6)–adjustmentofpreviouslyunrecognised

temporarydifferences 10.0 152.6 5.5 141.3

TOTAL TAxATION (238.6) (242.4) (310.2) (293.4)

11. EARNINGS PER SHAREBasicearningspershareoftheGroupwascalculatedbydividingthenetprofitattributabletoequityholdersbytheweightedaveragenumberofissuedandpaid-upordinarysharesoftheCompanyinissueduringthefinancialyear.Thereisnodilutivepotentialordinarysharesasat31December2012.Thus,dilutedearningspershareequalsbasicearningspershare.

The Group

2012 2011

ProfitattributabletoequityholdersoftheCompany(RMmillion) 1,263.7 1,191.0Weightedaveragenumberofordinaryshares(million) 3,577.4 3,576.5

Basic/Diluted earnings per share (sen) attributable to equity holders of the Company 35.3 33.3

287




12. DIVIDENDS IN RESPECT OF ORDINARY SHARES Dividendsapprovedandpaidinrespectofordinaryshares:

2012 2011

The Company

Grossdividend

per shareSen

Amount ofsingle-tier

dividendRM

Grossdividend

per shareSen

Amount ofdividend, netof 25.0% tax

RM

Amount of single-tier

dividendRM

Finaldividendspaidinrespectofthefinancialyearsended:

–31December2011 9.8 350.6 – – ––31December2010 – – 13.1 351.5 –Interimdividendspaidinrespectofthefinancial

yearsended:–31December2012 9.8 350.6 – – ––31December2011 – – 9.8 – 350.6

DIVIDENDS RECOGNISED AS DISTRIBUTION TO ORDINARY EqUITY HOLDERS OF THE COMPANY 19.6 701.2 22.9 351.5 350.6

Inrespectofthefinancialyearended31December2012,theDirectorsnowrecommendafinalsingle-tierdividendof12.2senpershareamountingtoRM436.4million(2011:afinalsingle-tierdividendof9.8senpershareamountingtoRM350.6million)fortheshareholders’approvalattheforthcomingAnnualGeneralMeetingoftheCompany.

288




13. SHARE CAPITAL

31.12.2012 31.12.2011 1.1. 2011

The Group and CompanyNumber of

shares RMNumber of

shares RMNumber of

shares RMAuthorised:

OrdinarysharesofRM0.70each(2011:RM1.00each)(sub-note(d)) 5,000.0 3,500.0 5,000.0 5,000.0 5,000.0 5,000.0SpecialShareofRM1.00(sub-note(a)) # # # # # #1,000ClassARedeemablePreferenceSharesofRM0.01each* – – – – # #1,000ClassBRedeemablePreferenceSharesofRM0.01each* – – – – # #2,000ClassCNon-ConvertibleRedeemablePreferenceShares

ofRM1.00each(sub-note(b)) # # # # # #1,000ClassDNon-ConvertibleRedeemablePreferenceShares

ofRM1.00each(sub-note(b)) # # # # # #ClassERedeemablePreferenceSharesofRM0.01each* – – – – 4,000.0 40.0ClassFRedeemablePreferenceSharesofRM0.01each(sub-note(c)) 4,000.0 40.0 4,000.0 40.0 – –

TOTAL AUTHORISED SHARE CAPITAL 9,000.0 3,540.0 9,000.0 5,040.0 9,000.0 5,040.0

2012 2011

The Group and CompanyNumber of

shares RMNumber of

shares RMIssuedandfullypaid:

OrdinarysharesofRM1.00eachAt1January 3,577.4 3,577.4 3,568.1 3,568.1Capitalrepayment(sub-note(d)) – (1,073.2) – –Disposalofsharesattributedtothelapsedoptions(sub-note(e)(ii)) – – 9.3 9.3

At31December 3,577.4 2,504.2 3,577.4 3,577.4

ClassFRedeemablePreferenceSharesofRM0.01eachAt1January – – – –BonusissueofRedeemablePreferenceShares(sub-note(c)) – – 3,577.4 35.8RedemptionofRedeemablePreferenceShares(sub-note(c)) – – (3,577.4) (35.8)

At31December – – – –

SpecialShareofRM1.00(sub-note(a))At1Januaryand31December # # # #

TOTAL ISSUED AND FULLY PAID-UP SHARE CAPITAL 3,577.4 2,504.2 3,577.4 3,577.4

# AmountlessthanRM0.1million* Duringthelastfinancialyear,theCompanyhadalteredthecompositionofitsauthorisedsharecapitalwhichwasapprovedbytheshareholdersatanExtraordinary

GeneralMeeting(EGM)heldon10May2011.

(a) Special Rights Redeemable Preference Share (Special Share) TheSpecialShareofRM1.00wouldenabletheGovernmentthroughtheMinisterofFinancetoensurethatcertain

majordecisionsaffectingtheoperationsoftheCompanyareconsistentwiththeGovernment’spolicy.TheSpecialShareholder,whichmayonlybetheGovernmentoranyrepresentativeorpersonactingonitsbehalf,isentitledtoreceivenoticesofmeetingsbutdoesnotcarryanyrighttovoteatsuchmeetingsoftheCompany.However,theSpecialShareholderisentitledtoattendandspeakatsuchmeetings.

289




13. SHARE CAPITAL (CONTINUED)(a) Special Rights Redeemable Preference Share (Special Share) (continued)

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,mergerandtakeover,requirethepriorconsentoftheSpecialShareholder.

TheSpecialShareholderhastherighttorequiretheCompanytoredeemtheSpecialShareatparatanytime.Inadistributionofcapital inawindingupoftheCompany,theSpecialShareholderisentitledtotherepaymentofthecapitalpaid-upontheSpecialShareinprioritytoanyrepaymentofcapitaltoanyothermember.TheSpecialSharedoesnotconferanyrighttoparticipateinthecapitalorprofitsoftheCompany.

(b) Non-Convertible Redeemable Preference Shares (NCRPS)

Thesecomprise2,000ClassCNCRPSofRM1.00eachand1,000ClassDNCRPSofRM1.00each.On20July2007,the Company issued 2,000 Class C NCRPS (TM NCRPS C) and 925 Class D NCRPS (TM NCRPS D) at a premiumof RM999.00 each over the par value of RM1.00 each. TM NCRPS C and TM NCRPS D rank pari passu amongstthemselvesbutbelowtheSpecialShareandaheadoftheordinarysharesoftheCompanyinadistributionofcapitalintheeventofthewindinguporliquidationoftheCompany.TMNCRPSCandTMNCRPSDhavebeenclassifiedasliabilities.

ThedetailsofTMNCRPSCandTMNCRPSDaresetoutinnote16(a)(I)tothefinancialstatements.

(c) Class F Redeemable Preference Shares (Class F RPS)

On25February2011,theCompanyannouncedaproposedcapitaldistributiontoitsshareholdersofapproximatelyRM1,037.4 million or RM0.29 for each ordinary share of RM1.00 each in the Company (Capital Distribution). TheproposalwasapprovedbyitsshareholdersatanEGMheldon10May2011.

TofacilitatetheCapitalDistribution,theCompanyhad,attheEGM,alteredthecompositionofitsauthorisedsharecapitalbythecreationof4,000.0millionClassFRPSofRM0.01each.On7June2011theCompanyimplementedabonusissueof3,577.4millionClassFRPSofRM0.01eachtoentitledshareholders,onthebasisof1ClassFRPSforeachordinaryshareofRM1.00eachheld.ThebonusissuewasissuedataparvalueofRM0.01foreachClassFRPSbywayofcapitalisationoftheCompany’ssharepremiumaccount.

Subsequentthereto,theCompanyhad,onthesamedayredeemedtheClassFRPSataredemptionpriceofRM0.29foreachordinaryshareheld.TheparvalueofRM0.01perClassFRPSrepresentingRM35.8million in total,wasredeemedoutoftheCompany’sretainedprofitsandresultedinthecreationofacapitalredemptionreserve,whilst,thepremiumonredemptionofRM0.28foreachClassFRPSorRM1,001.6millionwasredeemedoutoftheCompany’ssharepremiumaccountresultingincashpaymentofRM0.29foreachordinaryshareheldorRM1,037.4milliontoentitledshareholders.Thepaymentwasmadeon15June2011.

290




13. SHARE CAPITAL (CONTINUED)(d) Capital Repayment

On24February2012,theCompanyannouncedaproposedcapitalrepaymentto itsshareholdersofapproximatelyRM1,073.2millionorRM0.30foreachordinaryshareofRM1.00eachintheCompany(CapitalRepayment).

TheproposalwasapprovedbyitsshareholdersatanExtraordinaryGeneralMeeting(EGM)heldon8May2012.TofacilitatetheimplementationoftheCapitalRepayment,theCompanyhad,attheEGM,amendedtheMemorandumandArticlesofAssociationtoreflectthereductionintheparvalueofeachordinarysharefromRM1.00toRM0.70pershare.

Consequently, on 13 July 2012 the High Court of Malaya had granted an order confirming the proposed CapitalRepaymenttobecarriedoutbasedonthespecialresolutionapprovedbytheshareholderattheEGM.TheCapitalRepaymentwasimplementedbywayofareductionoftheissuedandpaid-upsharecapitaloftheCompanyunderSection64oftheCompaniesAct,1965,wherebyon1August2012,theparvalueofeachordinaryshareoftheCompanywasreducedfromRM1.00toRM0.70pershare.ThetotalnumberofordinarysharesoftheCompanyinissueremainedunchangedat3,577.4millionshares.

On16July2012,theCompanyhadannouncedtheEntitlementDateof31July2012fortheCapitalRepayment.Thecapitalrepaymentwascompleteduponcashpaymenttoeligibleshareholderson15August2012.

(e) Special ESOS Shares

(i) On 17 March 2008, the Company issued 137,592,300 shares (Special ESOS Shares) at fair value to TM ESOSManagementSdnBhd(TEM),anewlyincorporatedtrustcompany,underanEmployees’ShareOptionScheme(SpecialESOS)inexchangeforinvestmentinTEM,therebymakingTEMasubsidiaryaswellasashareholderoftheCompany.AdjustmentstotheinvestmentinTEMisatransactionwiththeCompany’sshareholderandisthereforerecordedinequity.

In the Company’s separate financial statements, this is recorded as ‘Special ESOS Reserve’ which has beenreclassified to paid-up capital and share premium of the Company upon receipt of the consideration for theissuanceofsharestoemployeesorotherthirdparties.Intheconsolidatedfinancialstatements,theissuanceofSpecialESOSSharestoTEMisanintra-grouptransactionandthereforenotrecordeduntiltheSpecialESOSSharesareissuedtoemployeesorotherpartiesoutsidetheGroup.

(ii) Duringthelastfinancialyear,9.3millionordinarysharesofRM1.00eachwereissuedupondisposalsofordinarysharesattributed to lapsedoptionsbyTEM.The featuresof theSpecialESOSprovide for thedisposalof theexcessunallocatedsharesandsharesattributabletolapsedoptionsintheopenmarketuponexpirationoftheSpecialESOSatthediscretionoftheSpecialESOSOptionCommittee.

TheabovesharesrankparipassuinallrespectswiththeexistingissuedordinarysharesoftheCompany.

291




14. OTHER RESERVES


31.12.2012RM

31.12.2011RM

1.1.2011RM

31.12.2012RM

31.12.2011RM

1.1.2011RM

SpecialESOSreserve(note13(e)) – – – – – 200.2Fairvaluereserves(note2(h)(iii)) 62.6 72.3 332.4 62.6 72.3 80.8Hedgingreserve(note2(j)) 26.9 32.1 – 26.9 32.1 –Capitalredemptionreserve

(note13(c)) 71.6 71.6 35.8 71.6 71.6 35.8Currencytranslationdifferences

arisingfromtranslationofsubsidiaries (3.9) (0.3) (1.4) – – –

TOTAL OTHER RESERVES 157.2 175.7 366.8 161.1 176.0 316.8

15. RETAINED PROFITSPursuanttotheFinanceAct,2007,thesingle-tiersystemwasintroducedwitheffectfromtheyearofassessment2008.Underthesingle-tiersystem,thetaxonacompany’sprofitisafinaltaxandthedividendsdistributedtoitsshareholderswouldbeexemptedfromtax.Withtheimplementationofthesingle-tiersystem,companieswithunutilisedSection108balancesareallowedtoeitherelectfortheirrevocableoptiontoswitchovertothesingle-tiersystemorcontinueutilisingtheavailableSection108balancesasat31December2007untilsuchtimethetaxcreditisfullyutilisedoruponexpiryofthe6yearstransitionalperiodon31December2013,whicheverisearlier.

TheCompanyhaselectedfortheirrevocableoptiontodisregardtheremainingSection108balanceofRM0.7millionon13September2011and thus,had,on thesameday,switchedover to thesingle-tiersystemandallowed todistributesingle-tierdividend.

Asat31December2012,theCompanyhastaxexemptprofitsofRM100.5million(31December2011:RM100.5million;1January2011:RM96.3million)subjecttotheagreementbytheInlandRevenueBoard.

292




16. BORROWINGS

31.12.2012 31.12.2011 1.1.2011

The Group

Weighted Average

Rate of Finance

Non-current

RMCurrent

RMTotal

RM

Weighted Average

Rate of Finance

Non-current

RMCurrent

RMTotal

RM

Weighted Average

Rate of Finance

Non-current

RMCurrent

RMTotal

RM

DOMESTIC Unsecured Borrowingsfromfinancialinstitutions 4.19% – 3.0 3.0 5.53% – 3.0 3.0 5.70% 3.0 21.4 24.4BorrowingsunderIslamicprinciples–TMIslamicStapledIncomeSecurities

(sub-note(a)and(b)) 5.57% 925.0 2,000.0 2,925.0 5.57% 2,925.0 – 2,925.0 5.57% 2,925.0 – 2,925.0–Fairvalueofhedgedrisk(sub-note(b)) – 16.0 2.6 18.6 – 30.4 – 30.4 – (1.6) – (1.6)–IslamicMediumTermNotes(sub-note(c)) 4.19% 1,350.0 – 1,350.0 4.31% 800.0 – 800.0 – – – –Otherborrowings(sub-note(d)) 4.70% 172.5 0.6 173.1 4.69% 166.0 0.9 166.9 4.69% 160.8 1.0 161.8Financelease(sub-note(e)) 6.23% 50.7 3.8 54.5 6.23% 54.6 3.6 58.2 6.34% 58.2 3.4 61.6

Total Domestic 5.10% 2,514.2 2,010.0 4,524.2 5.24% 3,976.0 7.5 3,983.5 5.54% 3,145.4 25.8 3,171.2

FOREIGN UnsecuredBorrowingsfromfinancialinstitutions 0.91% 275.0 – 275.0 – – – – – – – –NotesandDebentures(sub-note(f)) 6.28% 2,337.7 – 2,337.7 6.28% 2,423.2 – 2,423.2 6.28% 2,356.9 – 2,356.9Otherborrowings – 3.3 0.2 3.5 – 3.5 0.2 3.7 – 3.7 0.2 3.9

Total Foreign 5.71% 2,616.0 0.2 2,616.2 6.27% 2,426.7 0.2 2,426.9 6.27% 2,360.6 0.2 2,360.8

TOTAL BORROWINGS 5.33% 5,130.2 2,010.2 7,140.4 5.63% 6,402.7 7.7 6,410.4 5.85% 5,506.0 26.0 5,532.0

31.12.2012 31.12.2011 1.1.2011

DomesticRM

ForeignRM

TotalRM

DomesticRM

ForeignRM

TotalRM

DomesticRM

ForeignRM

TotalRM

TheGroup’snon-currentborrowingsarerepayableasfollows:Afteroneyearanduptofiveyears 205.9 1,697.7 1,903.6 2,154.3 1,474.9 3,629.2 2,099.1 1,434.7 3,533.8Afterfiveyearsanduptotenyears 2,305.3 0.8 2,306.1 1,811.8 0.8 1,812.6 1,029.9 0.8 1,030.7Aftertenyearsanduptofifteenyears 3.0 916.4 919.4 9.9 949.8 959.7 16.3 923.7 940.0Afterfifteenyears – 1.1 1.1 – 1.2 1.2 0.1 1.4 1.5

2,514.2 2,616.0 5,130.2 3,976.0 2,426.7 6,402.7 3,145.4 2,360.6 5,506.0

293




16. BORROWINGS (CONTINUED)

31.12.2012 31.12.2011 1.1.2011

The Company

Weighted Average

Rate of Finance

Non-current

RMCurrent

RMTotal

RM

Weighted Average

Rate of Finance

Non-current

RMCurrent

RMTotal

RM

Weighted Average

Rate of Finance

Non-current

RMCurrent

RMTotal

RM

DOMESTICUnsecuredBorrowingsunderIslamicprinciples–TMIslamicStapledIncomeSecurities

(sub-note(a)and(b)) 5.57% 925.0 2,000.0 2,925.0 5.57% 2,925.0 – 2,925.0 5.57% 2,925.0 – 2,925.0–Fairvalueofhedgedrisk(sub-note(b)) – 16.0 2.6 18.6 – 30.4 – 30.4 – (1.6) – (1.6)–IslamicMediumTermNotes(sub-note(c)) 4.19% 1,350.0 – 1,350.0 4.31% 800.0 – 800.0 – – – –Otherborrowings(sub-note(d)) 4.70% 172.5 0.6 173.1 4.69% 166.0 0.9 166.9 4.69% 160.8 1.0 161.8Financelease(sub-note(e)) 6.23% 50.7 3.8 54.5 6.23% 54.6 3.6 58.2 6.34% 58.2 3.4 61.6

Total Domestic 5.10% 2,514.2 2,007.0 4,521.2 5.24% 3,976.0 4.5 3,980.5 5.54% 3,142.4 4.4 3,146.8

FOREIGN UnsecuredNotesandDebentures(sub-note(f)) 7.89% 915.6 – 915.6 7.89% 949.0 – 949.0 7.89% 922.9 – 922.9Otherborrowings – 3.3 0.2 3.5 – 3.5 0.2 3.7 – 3.7 0.2 3.9

Total Foreign 7.86% 918.9 0.2 919.1 7.86% 952.5 0.2 952.7 7.86% 926.6 0.2 926.8

TOTAL BORROWINGS 5.57% 3,433.1 2,007.2 5,440.3 5.75% 4,928.5 4.7 4,933.2 6.07% 4,069.0 4.6 4,073.6

31.12.2012 31.12.2011 1.1.2011

DomesticRM

ForeignRM

TotalRM

DomesticRM

ForeignRM

TotalRM

DomesticRM

ForeignRM

TotalRM

TheCompany’snon-currentborrowingsarerepayableasfollows:Afteroneyearanduptofiveyears 205.9 0.6 206.5 2,154.3 0.7 2,155.0 2,096.1 0.7 2,096.8Afterfiveyearsanduptotenyears 2,305.3 0.8 2,306.1 1,811.8 0.8 1,812.6 1,029.9 0.8 1,030.7Aftertenyearsanduptofifteenyears 3.0 916.4 919.4 9.9 949.8 959.7 16.3 923.7 940.0Afterfifteenyears – 1.1 1.1 – 1.2 1.2 0.1 1.4 1.5

2,514.2 918.9 3,433.1 3,976.0 952.5 4,928.5 3,142.4 926.6 4,069.0

294




16. BORROWINGS (CONTINUED)Thecurrencyexposureprofileofborrowingsisasfollows:


31.12.2012RM

31.12.2011RM

1.1.2011RM

31.12.2012RM

31.12.2011RM

1.1.2011RM

RinggitMalaysia 4,524.2 3,983.5 3,171.2 4,521.2 3,980.5 3,146.8USDollar 2,337.7 2,423.2 2,356.9 915.6 949.0 922.9Othercurrencies 278.5 3.7 3.9 3.5 3.7 3.9

7,140.4 6,410.4 5,532.0 5,440.3 4,933.2 4,073.6

(a) On20July2007, theCompanyhad, through itselfand itswhollyownedsubsidiary,HijrahPertamaBerhad(HPB),issuedtheTMIslamicStapledIncomeSecurities(TMISIS)consistingof:

(i) (a)RM2.0millionClassCNon-ConvertibleRedeemablePreferenceShares(NCRPS)(TMNCRPSC)consistingof2,000ClassCNCRPSofRM1.00eachatapremiumofRM999issuedbytheCompanyatanissuepriceofRM1,000each;

(b)SukukIjarahClassAofnominalvalueRM1,998.0millionissuedbyHPB;and

(ii) (a)RM925,000ClassDNCRPS(TMNCRPSD)consistingof925ClassDNCRPSofRM1.00eachatapremiumofRM999issuedbytheCompanyatanissuepriceofRM1,000each;

(b)SukukIjarahClassBofnominalvalueRM924,075,000issuedbyHPB.

SukukIjarahClassAandBarecollectivelyreferredtoas‘Sukuk’.

TheTMNCRPS(whichcomprisesClassCandClassDNCRPSrespectively)areeffectivelylinkedtotheSukukinthattheTMNCRPSandtheSukukareissuedsimultaneouslytothesamepartiesandtheperiodicdistributionobligationsundertheSukukaredependentonthepaymentsmadeundertheTMNCRPS.TheoutstandingamountofSukukaretreatedasborrowingbytheCompanyastheSukukareeffectivelyobligationsoftheCompany.

TheTMISISareclassifiedasdebtinstrumentsandhencearereportedasliabilities.Consequently,dividendpayableunderTMNCRPSandrentalpayableunderSukukarereportedasfinancecost.

Salienttermsoftheabovetransactionsare:

(I) TM NCRPS TheprinciplefeaturesoftheTMNCRPSaresummarisedasfollows:

(i) TheNCRPSwillnotbeconvertibletoordinarysharesoftheCompany.

(ii) The NCRPS are not transferable/tradable and will be held by Primary Subscribers. The NCRPS will bemandatorilyredeemedbytheCompanyuponmaturityoftheSukuk.

(iii) TherewillbenovotingrightsexceptwithregardstotheproposaltoreducethecapitaloftheCompany,sanctioningthedisposalofthewholeoftheCompany’sproperty,businessandundertakingorwherethepropositiontobesubmittedtothemeetingdirectlyaffectstherightsandprivilegesoftheNCRPSholdersorasprovidedforintheCompaniesAct,1965.

295




16. BORROWINGS (CONTINUED)(a) Salienttermsoftheabovetransactionsare:(continued)

(I) TM NCRPS (continued)

(iv) TheNCRPSwillnotbelistedonanyoftheboardsofBursaMalaysiaSecuritiesBerhad.

(v) The NCRPS shall rank pari passu amongst themselves but below the Special Share and ahead of theCompany’sordinarysharesinadistributionofcapitalintheeventofthewindinguporliquidationoftheCompany.

(II) Sukuk Ijarah

TheSukukareissuedin4classesandisforthepurposesoffinancingthepurchasebyHPBofthebeneficialownershipofcertainassets.TheSukukcomprisethefollowingclasses:

(i) ClassASukukcomprisingClassA1SukukandClassA2Sukuk(collectivelyreferredtoas‘ClassASukuk’)

(ii) ClassBSukukcomprisingClassB1SukukandClassB2Sukuk(collectivelyreferredtoas‘ClassBSukuk’)

TheClassASukukandClassBSukukshallrepresentundividedbeneficialownershipintherelevantassetsandshallconstitutedirect,unconditionalandunsecuredtrustobligationsofHPBandshallatall timesrankparipassu,withoutdiscrimination,preferenceorpriorityamongstthemselves.

FeaturesoftheSukukaresummarisedasfollows:

(i) The Sukuk shall constitute trust obligations of HPB in relation to, and represent undivided beneficialownershipintheassets.

(ii) ClassA2SukukandClassB2Sukukarenottransferable/tradableandwillbeheldbyPrimarySubscribersuntilmaturityoftheSukuk.

(iii) TheSukukwillconstitute,interalia,theobligationsoftheCompany.

(iv) TheobligationsoftheCompanyinrespectoftheSukukwillconstitutedirect,unconditionalandunsecuredobligations of the Company and shall at all times rank pari passu, without discrimination, preferenceorpriorityamongstthemselvesandat leastparipassuwithallotherpresentandfutureunsecuredandunsubordinatedobligationsoftheCompany,subjecttothosepreferredbylaworthetransactiondocuments.

(v) TheSukukcarryaratingofAAAbyRAMRatingServicesBerhadatthedateofissue.

TherespectivetenureoftheSukukareasfollows:

Class Maturity Dates

A1 30December2013

A2 30December2013

B1 28December2018

B2 28December2018

296




16. BORROWINGS (CONTINUED)(a) Salienttermsoftheabovetransactionsare:(continued)

(II) Sukuk Ijarah (continued)

DuringthetenureoftheTMISIS,theCompanycanelecttoeither:

(i) Paygrossdividends,comprisingnetdividendwiththerespectivetaxcreditstoinvestorsandNominalRentalpayabletoHPB;or

(ii) Pay full rental to HPB, which in turn distributes the same as periodic distribution to investors who areholdingClassA2SukukandClassB2Sukuk.

WheretheCompanyelectstopaydividend,HPBwillonlyreceiveNominalRentalundertheleaseagreementwhich it in turn would pay out to investors under Class A2 Sukuk and Class B2 Sukuk as nominal periodicdistribution.Thenominalperiodicdistributionrateis0.01%perannum.

WheretheCompanyelectstopayfullrental,thePeriodicDistributionRateasintheTMISISofClassCNCRPSandClassDNCRPSwhichislinkedtoClassASukukandClassBSukukis6.20%and5.25%perannumrespectively,payablesemi-annuallyinarrears.ThePeriodicDistributionRateforClassBSukukwasreseton31December2008to4.193%perannumpayablesemi-annuallyinarrears.ThePeriodicDistributionRateforClassBSukukwillberesetagaininDecember2013.

Pursuant toFinanceAct,2007, taxcreditscanno longerbepassedon to the investorswhoarenotordinaryshareholderseffectivefrom1January2008.

(b) Aportionof thesecurityasdescribed insub-note (a)above,hasbeenhedgedwith interestrateswapswhichareaccountedforusinghedgeaccounting.Hence,fairvalueattributabletothechangesininterestrateriskthathasbeenhedged,isincludedinborrowings.

(c) During the last financial year, the Company established an Islamic Commercial Papers (ICP) programme and anIslamicMediumTermNotes(IMTN)programmewithacombinedlimitofuptoRM2.0billioninnominalvalue.Theseprogrammeshaverespectivetenuresof7and15yearsfromthedateoffirstissuance.TheICPshallhavetenureofnotmorethan12monthswhilsttheIMTNbetween1to15yearsprovidedthattherespectivedebtsecuritiesmaturebeforetheexpiryoftherespectiveprogrammes.TheproceedsfromtheissuanceoftheICPand/orIMTNwereusedbytheCompanytomeetitscapitalexpenditurerequirement.TheIMTNinissuecomprisethefollowing:

The Group and Company

2012RM

2011RM

4.50%IMTNduein2021 300.0 300.04.20%IMTNduein2021 500.0 500.04.00%IMTNduein2022 250.0 –3.95%IMTNduein2022 300.0 –

1,350.0 800.0

297




16. BORROWINGS (CONTINUED)(d) Domesticotherborrowings include thepresentvalueof futurepaymentobligationrelated toagovernmentgrant

receivedbytheCompany.

(e) Minimumleasepaymentsatthereportingdateareasfollows:


31.12.2012RM

31.12.2011RM

1.1.2011RM

Notlaterthanoneyear 7.1 7.1 7.1Laterthanoneyearandnotlaterthanfiveyears 28.4 28.4 28.6Laterthanfiveyearsandnotlaterthantenyears 35.5 35.5 35.7Laterthantenyearsandnotlaterthanfifteenyears 2.9 10.0 17.3

73.9 81.0 88.7Futurefinancecharges (19.4) (22.8) (27.1)

Presentvalueoffinanceleaseliabilities 54.5 58.2 61.6

Presentvalueoffinanceleaseliabilitiesatthereportingdateisasfollows:

Notlaterthanoneyear 3.8 3.6 3.4Laterthanoneyearandnotlaterthanfiveyears 18.0 16.9 15.8Laterthanfiveyearsandnotlaterthantenyears 29.8 28.0 26.3Laterthantenyearsandnotlaterthanfifteenyears 2.9 9.7 16.1

54.5 58.2 61.6

ThefinanceleasereferstoaleasingarrangementforanofficebuildingoftheCompanyinMelaka.

(f) NotesandDebenturesconsistofthefollowing:


31.12.2012RM

31.12.2011RM

1.1.2011RM

31.12.2012RM

31.12.2011RM

1.1.2011RM

USD465.1million5.25%GuaranteedNotesduein2014 1,422.1 1,474.2 1,434.0 – – –

USD300.0million7.875%Debenturesduein2025 915.6 949.0 922.9 915.6 949.0 922.9

2,337.7 2,423.2 2,356.9 915.6 949.0 922.9

NoneoftheNotesandDebentureswasredeemed,purchasedorcancelledduringthecurrentfinancialyear.

298




17. PAYABLE TO A SUBSIDIARY(i) On22September2004,theCompany’swhollyownedsubsidiary,TMGlobal Incorporated,acompanyincorporated

in the Federal Territory of Labuan, under the Offshore Companies Act, 1990, issued a 10-year USD500.0 millionGuaranteedNotesduein2014(Notes).TheNotescarryaninterestrateof5.25%perannumpayablesemi-annuallyinarrearson22Marchand22SeptemberineachfinancialyearcommencinginMarch2005.TheNoteswillmatureon22September2014.ProceedsfromthetransactionwereutilisedtorefinancetheCompany’smaturingdebtandgeneralworkingcapital.TheNotesareunconditionalandirrevocablyguaranteedbytheCompany.

On4December2009,theCompanyrepurchasedUSD34.9millioninnominalvalueoftheNotes.NoneoftheremainingNoteswasredeemed,purchasedorcancelledduringthecurrentfinancialyear.

(ii) On20November2012,theCompany’swhollyownedsubsidiary,TMGlobalIncorporated,acompanyincorporatedintheFederalTerritoryofLabuanundertheOffshoreCompaniesAct,1990,obtaineda5-yearJPY7.8billionloanfromafinancialinstitutionwhichwillmatureon20November2017.TheloancarriesafixedJPYinterestrateof0.91375%perannumpayablesemi-annuallyon20Mayand20Novemberofeachfinancialyear.TheloanwasutilisedtorepaythetwoIslamicCommercialPapersissuedbytheCompanyofRM150.0millioneachmaturedon21November2012.TheloanisunconditionallyandirrevocablyguaranteedbytheCompany.

TheNotesandtermloanarereflectedasborrowingsoftheGroup(note16tothefinancialstatements).

18. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING TRANSACTIONS


Contract or notional

amountRM

Fair value changes

during the financial

yearRM

Fair value

AssetsRM

Liabilities RM

31.12.2012Derivatives at fair value through profit or lossForwardforeigncurrencycontracts(sub-note(b))–1yearto3years 593.6 0.3 25.6 (6.4)Derivatives accounted for under hedge accountingInterestrateswaps–fairvaluehedge(sub-note(i))–lessthan1year(sub-note(c)) 1,500.0 2.6 – (7.4)–morethan3years(sub-note(d)) 500.0 16.0 – (4.4)

2,000.0 18.6 – (11.8)Crosscurrencyinterestrateswaps–cashflowhedge

(sub-note(ii))–morethan3years(sub-note(a)&(e)) 609.4 26.8 25.9 (34.9)

TOTAL 3,203.0 45.7 51.5 (53.1)

299





Contract or notional

amountRM

Fair value changes

during the financial

yearRM

Fair value

AssetsRM

Liabilities RM

31.12.2011Derivatives at fair value through profit or lossForwardforeigncurrencycontracts(sub-note(b))–1yearto3years 344.3 – 18.9 3.9Derivatives accounted for under hedge accountingInterestrateswaps–fairvaluehedge(sub-note(i))–1yearto3years(sub-note(c)) 1,500.0 10.0 – 15.2–morethan3years(sub-note(d)) 500.0 20.4 – 16.8

2,000.0 30.4 – 32.0Crosscurrencyinterestrateswaps–cashflowhedge

(sub-note(ii))–morethan3years(sub-note(a)) 310.5 35.8 – 35.8

TOTAL 2,654.8 66.2 18.9 71.7

1.1.2011Derivatives at fair value through profit or lossForwardforeigncurrencycontracts(sub-note(b))–morethan3years 344.3 – 22.8 (19.8)Derivatives accounted for under hedge accountingInterestrateswaps–fairvaluehedge(sub-note(i))–1yearto3years(sub-note(c)) 1,500.0 – 5.2 1.5–morethan3years(sub-note(d)) 500.0 3.6 – 2.0

2,000.0 3.6 5.2 3.5

TOTAL 2,344.3 3.6 28.0 (16.3)

18. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING TRANSACTIONS (CONTINUED)

300




18. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING TRANSACTIONS (CONTINUED)(i) Thecumulativegainsor lossesonthehedged itemsattributableto thehedgedrisk isdisclosed innote16to the

financialstatements.

(ii) Hedgeaccountinghasbeenappliedforthesecashflowhedgeswheretheunderlyinghedgeditemsareasfollows:

(a) thehedgedportionoftherecurringsemi-annualcouponpaymentandfinalsettlementoftheUSD300.0million7.875%Debenturesduein2025.

(b) semi-annualinterestpaymentandfinalsettlementoftheJPY7.8billionloanduein2017.

Thereisnoineffectivenesstoberecordedfromfairvalueandcashflowhedgesaccountedforunderhedgeaccounting.

Fair values of financial derivative instruments are the present values of their future cash flows. Favourable fair valueindicatesamountreceivablebytheGroupandtheCompanyifthecontractsareterminatedorviceversa.TheGroupandtheCompanyareexposedtocreditriskwherethefairvalueofthecontractisfavourable,wherethecounterpartyisrequiredtopaytheGrouportheCompanyintheeventofcontracttermination.

ThemaximumexposuretocreditriskatthereportingdateisthecarryingamountofthederivativeassetsaspresentedontheStatementsofFinancialPosition.

SummarisedbelowarethederivativehedgingtransactionsenteredintobytheCompany:

(a) Cross Currency Interest Rate Swap (CCIRS) Contracts

Underlying Liability USD300.0 million 7.875% Debentures due in 2025

In1995,theCompanyissuedUSD300.0million7.875%Debenturesduein2025.

Hedging Instruments

On17October2011,theCompanyenteredintoaCCIRSagreementwithanotionalamountofUSD50.0millionthatentitlesittoreceiveinterestatafixedrateof7.875%perannumonUSDnotionalamountandobligesittopayinterestatafixedrateof7.875%ontheRMnotionalamount(calculatedatapre-determinedexchangerate).Theswapwillmatureon1August2025.Onthematuritydate,theCompanywouldreceivetheUSDnotionalamountandpaythecounterpartyanequivalentRMamountofRM154.0million.

On2December2011,theCompanyenteredintoanotherCCIRSagreementwithanotionalamountofUSD50.0millionthatentitlesittoreceiveinterestatafixedrateof7.875%perannumonUSDnotionalamountandobligesittopayinterestatafixedrateof7.875%ontheRMnotionalamount(calculatedatapre-determinedexchangerate).Theswapwillmatureon1August2025.Onthematuritydate,theCompanywouldreceivetheUSDnotionalamountandpaythecounterpartyanequivalentRMamountofRM156.5million.

TheCCIRScontractseffectivelyconvertpartoftheUSDliabilityintoRMliability.

301




18. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING TRANSACTIONS (CONTINUED)SummarisedbelowarethederivativehedgingtransactionsenteredintobytheCompany:(continued)

(b) Forward Foreign Currency Contracts

Underlying Liability USD465.1 million 5.25% Guaranteed Notes due in 2014

In 2004, TM Global Incorporated issued USD500.0 million 5.25% Guaranteed Notes due in 2014. The Notes areredeemableinfullon22September2014.On4December2009,theCompanyrepurchasedUSD34.9millionoftheNotes.

Hedging Instruments

On10March2009,theCompanyenteredintoaforwardforeigncurrencycontractwhichwillmatureon22September2014.Onthematuritydate,theCompanywouldreceiveUSD50.0millionfromthecounterpartyinreturnforapaymentofRM174.5million.TheobjectiveofthistransactionistoeffectivelyconvertpartoftheUSDliabilityintoRMprincipalliability.

On 28 May 2009, the Company entered into another forward foreign currency contract which will mature on22September2014.Onthematuritydate,theCompanywouldreceiveUSD50.0millionfromthecounterpartyinreturnforapaymentofRM169.8million.TheobjectiveofthistransactionistoeffectivelyconvertpartoftheUSDliabilityintoRMprincipalliability.

On 12 September 2012, the Company entered into a forward foreign currency contract which will mature on19 September 2014. On the maturity date, the Company would receive USD50.0 million from the counterparty inreturnforapaymenttobedeterminedlater.Iftheexchangerateatmaturitydateisbelowthepredeterminedrate,theCompanywillbuyUSDforRMforthenotionalamountattheminimumrate.Iftheexchangerateatmaturitydateisabovethepredeterminedrate,theCompanywillbuyUSDforRMforthenotionalamountbasedontheexchangerateadjustedforthedifferencebetweenthepredeterminedrateandtheminimumrate.

On17October2012,theCompanyenteredintoaforwardforeigncurrencycontractwhichwillmatureon19September2014.Onthematuritydate,theCompanywouldreceiveUSD30.0millionfromthecounterpartyinreturnforapaymentofRM94.9million.

(c) Interest Rate Swap (IRS) Contracts

Underlying Liability RM2,000.0 million 6.20% TM Islamic Stapled Income Securities (TM ISIS) due in 2013

In2007,theCompanyissuedRM2,000.0million6.20%TMISISduein2013.

Hedging Instruments

On9July2009,theCompanyenteredintoanIRSagreementwithanotionalprincipalofRM1,000.0millionthatentitlesittoreceiveinterestatafixedrateof6.20%perannumandobligesittopayinterestatafloatingrateof6monthsKualaLumpurInterbankOfferRate(KLIBOR)plus2.80%perannum.Theswapwillmatureon30December2013.

On17December2009,theCompanyenteredintoanothertwoIRSagreementswithanotionalprincipalofRM300.0millionandRM200.0millionrespectively.BothstructuresentitletheCompanytoreceiveinterestatafixedrateof6.20%perannumandobligesittopayinterestatafloatingrateof6monthsKLIBORplus2.76%perannum.Theswapswillmatureon30December2013.

302




18. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING TRANSACTIONS (CONTINUED)SummarisedbelowarethederivativehedgingtransactionsenteredintobytheCompany:(continued)

(d) Interest Rate Swap (IRS) Contract

Underlying Liability RM925.0 million 4.193% TM ISIS due in 2018

In2007,theCompanyissuedRM925.0million5.25%TMISISduein2018.Thecouponwasresetto4.193%perannumpayablesemi-annuallyinarrearson31December2008andwillberesetagaininDecember2013.

Hedging Instrument

On2November2009,theCompanyenteredintoanIRSagreementwithanotionalprincipalofRM500.0millionthatentitlesittoreceiveinterestatafixedrateof4.193%perannumandobligesittopayinterestatafloatingrateof6monthsKLIBORminus0.035%perannum.Theswapwillmatureon30December2016.

(e) Cross Currency Interest Rate Swap (CCIRS) Contract

Underlying Liability JPY7.8 billion 0.91375% Loan due in 2017

In2012,theCompany,throughitswhollyownedsubsidiary,TMGlobalIncorporated,obtaineda5-yearJPY7.8billionloanfromafinancialinstitution.

Hedging Instrument

On20November2012,theCompanyenteredintoaCCIRSagreementwithanotionalamountofJPY7.8billionthatentitles it toreceive interestatafixedrateof0.91375%perannumonJPYnotionalamountandobliges it topayinterestatafixedrateof3.62%ontheRMnotionalamount(calculatedatapre-determinedexchangerate).Theswapwillmatureon20November2017.Onthematuritydate,theCompanywouldreceivetheJPYnotionalamountandpaythecounterpartyanequivalentRMamountofRM298.9million.

TheCCIRScontractseffectivelyconverttheJPYliabilityintoRMliability.

303




19. DEFERRED TAx Deferredtaxassetsandliabilitiesareoffsetwhenthereisalegallyenforceablerighttosetoffcurrenttaxassetsagainst

currenttaxliabilitiesandwhenthedeferredtaxesrelatetothesametaxauthority.Thefollowingamounts,determinedafterappropriateoffsetting,arepresentedontheStatementsofFinancialPosition:


31.12.2012RM

31.12.2011RM

1.1.2011RM

31.12.2012RM

31.12.2011RM

1.1.2011RM

Subjecttoincometax:Deferredtaxassets 18.6 21.7 86.7 – – –Deferredtaxliabilities 1,202.6 1,541.8 1,646.4 1,076.7 1,438.8 1,495.6

TOTAL DEFERRED TAx 1,184.0 1,520.1 1,559.7 1,076.7 1,438.8 1,495.6


2012RM

2011RM

2012RM

2011RM

At1JanuaryAspreviouslyreported 1,520.1 1,577.5 1,438.8 1,513.4Adjustmentstoprioryears(note50(b)(ii)) – (17.8) – (17.8)

At1January,asrestated 1,520.1 1,559.7 1,438.8 1,495.6Currentyearcharged/(credited)totheIncomeStatement

arisingfrom:–property,plantandequipment 191.8 401.1 156.0 387.1–taxincentive (481.2) (335.6) (481.2) (335.6)–taxlosses 0.5 (1.1) – ––provisionsandothers (46.9) (103.8) (36.9) (108.3)

(335.8) (39.4) (362.1) (56.8)–currencytranslationdifferences (0.3) (0.2) – –

At 31 December 1,184.0 1,520.1 1,076.7 1,438.8

304




19. DEFERRED TAx (CONTINUED)Breakdownofcumulativebalancesbyeachtypeoftemporarydifference:


31.12.2012RM

31.12.2011RM

1.1.2011RM

31.12.2012RM

31.12.2011RM

1.1.2011RM

(a) Deferred tax assetsProperty,plantandequipment 53.3 142.3 370.7 37.5 130.2 353.5Taxincentive 816.8 335.6 – 816.8 335.6 –Taxlosses 1.4 1.9 0.6 – – –Provisionsandothers 451.0 407.9 317.3 433.1 396.2 308.1

1,322.5 887.7 688.6 1,287.4 862.0 661.6Offsetting (1,303.9) (866.0) (601.9) (1,287.4) (862.0) (661.6)

Total deferred tax assets after offsetting 18.6 21.7 86.7 – – –

(b) Deferred tax liabilitiesProperty,plantandequipment 2,480.9 2,378.4 2,205.7 2,364.1 2,300.8 2,137.0Provisionsandothers 25.6 29.4 42.6 – – 20.2

2,506.5 2,407.8 2,248.3 2,364.1 2,300.8 2,157.2Offsetting (1,303.9) (866.0) (601.9) (1,287.4) (862.0) (661.6)

Total deferred tax liabilities after offsetting 1,202.6 1,541.8 1,646.4 1,076.7 1,438.8 1,495.6

TheCompanywasgrantedapprovalunderSection127oftheIncomeTaxAct,1967forincometaxexemptionintheformofthefollowingInvestmentAllowance(IA):

(i) 100%onqualifyinglastmilebroadbandassetsacquiredwithinaperiodof5yearscommencing8September2007to7September2012tobesetoffagainst70%ofstatutoryincomeforeachyearofassessment.

(ii) 60%onqualifyinghighspeedbroadbandassetsacquiredwithinaperiodof5yearscommencing16September2008to15September2013tobesetoffagainst70%ofstatutoryincomeforeachyearofassessment.

Anyunutilisedallowancecanbecarriedforwardtosubsequentyearsuntilfullyutilised.Theamountofincomeexemptedfromtaxiscreditedtoatax-exemptaccountfromwhichtax-exemptdividendscanbedeclared.

ThedeferredtaxassetsonunutilisedIAhavebeenrecognisedonthebasisoftheCompany’sprevioushistoryofrecordingprofits,andtotheextentthatitisprobablethatfuturetaxableprofitswillbeavailableagainstwhichtemporarydifferencescanbeutilised.

305




19. DEFERRED TAx (CONTINUED)Thetaxeffectsofunutilisedtaxlossesandunabsorbedcapital/othertaxallowancesofsubsidiariesforwhichnodeferredtaxassethasbeenrecognisedontheStatementofFinancialPositionareasfollows:

The Group

31.12.2012RM

31.12.2011RM

1.1.2011RM

Unutilisedtaxlosses 131.7 143.5 134.3Unabsorbedcapital/othertaxallowances 331.1 319.6 292.8

462.8 463.1 427.1

The benefits of these tax losses and credits will only be obtained if the relevant subsidiaries derive future assessableincomeofanatureandamountsufficientforthebenefitstobeutilised.

20. DEFERRED INCOME


2012RM

2011RM

At1January 2,072.7 1,432.1Additions 249.8 764.4CreditedtotheIncomeStatement (193.1) (123.8)

At 31 December 2,129.4 2,072.7

DeferredincomeincludesgovernmentfundingforUniversalServiceProvision(USP),HighSpeedBroadband(HSBB)andBroadbandtotheGeneralPopulation(BBGP)projectwhichisamortisedonastraightlinebasisovertheestimatedusefullivesoftherelatedassets.

306




21. PROPERTY, PLANT AND EqUIPMENT

The Group

Telecom-munications

Network RM

Movable Plant and

EquipmentRM

Computer Support Systems

RM

Land(sub-note (e))

RM

Buildings (sub-note (c))

RM

Capital Work-In-Progress

RM

Total Property, Plant and

Equipment RM

Net Book ValueAt1January2012 8,711.5 374.5 934.0 876.9 1,934.3 1,290.5 14,121.7Additions(sub-note(a)) 372.6 121.9 11.7 – 9.3 2,047.4 2,562.9Assetisation 1,714.6 19.5 252.1 – 135.3 (2,121.5) – Disposals (0.5) (3.3) – (1.2) (0.4) – (5.4)Writeoff(note6(a)) (16.9) (1.3) (0.3) – (9.9) – (28.4)Depreciation(note6(a)) (1,383.9) (116.8) (360.7) (0.9) (135.4) – (1,997.7)Impairment(note6(a)) – (0.1) (0.1) – (0.1) – (0.3)Currencytranslationdifferences (1.3) – – – (0.3) (0.4) (2.0)Transfertonon-currentassetsheldforsale(note30) – – – (10.3) (2.9) – (13.2)Reclassification 27.3 1.6 (39.4) (19.8) 29.9 0.4 – At 31 December 2012 9,423.4 396.0 797.3 844.7 1,959.8 1,216.4 14,637.6At 31 December 2012Cost(sub-note(b)) 37,557.8 2,193.0 4,291.7 859.8 3,846.2 1,216.4 49,964.9Accumulateddepreciation (27,902.4) (1,796.1) (3,488.9) (12.4) (1,886.2) – (35,086.0)Accumulatedimpairment (232.0) (0.9) (5.5) (2.7) (0.2) – (241.3)Net Book Value 9,423.4 396.0 797.3 844.7 1,959.8 1,216.4 14,637.6

Net Book ValueAt1January2011

Aspreviouslyreported 7,979.1 363.0 830.9 363.2 1,925.8 1,650.1 13,112.1AdjustmentsarisingfromthetransitiontoMFRS

(note50(a)) – – – 508.7 – – 508.7At1January2011,asrestated 7,979.1 363.0 830.9 871.9 1,925.8 1,650.1 13,620.8Additions(sub-note(a)) 257.8 102.8 4.7 0.4 2.1 2,254.6 2,622.4Assetisation 2,040.1 20.3 394.2 6.9 152.7 (2,614.2) –Disposals (4.1) (3.4) – (1.2) (0.3) – (9.0)Disposalofasubsidiary – (0.1) (0.1) – – – (0.2)Writeoff(note6(a)) (84.3) (1.2) (2.9) – (9.0) – (97.4)Depreciation(note6(a)) (1,427.9) (120.5) (337.6) (1.0) (128.5) – (2,015.5)Impairment(note6(a)) (0.1) – – (0.1) – – (0.2)Currencytranslationdifferences 0.7 0.1 – – – – 0.8Reclassification (49.8) 13.5 44.8 – (8.5) – –At31December2011 8,711.5 374.5 934.0 876.9 1,934.3 1,290.5 14,121.7

At 31 December 2011Cost(sub-note(b)) 36,156.9 2,175.8 4,187.3 891.5 3,723.8 1,290.5 48,425.8Accumulateddepreciation (27,211.4) (1,800.5) (3,247.9) (11.9) (1,789.4) – (34,061.1)Accumulatedimpairment (234.0) (0.8) (5.4) (2.7) (0.1) – (243.0)NetBookValue 8,711.5 374.5 934.0 876.9 1,934.3 1,290.5 14,121.7

At 1 January 2011Cost(sub-note(b)) 35,031.3 2,099.2 4,080.5 885.4 3,606.3 1,650.1 47,352.8Accumulateddepreciation (26,803.3) (1,734.2) (3,243.2) (10.9) (1,680.4) – (33,472.0)Accumulatedimpairment (248.9) (2.0) (6.4) (2.6) (0.1) – (260.0)NetBookValue 7,979.1 363.0 830.9 871.9 1,925.8 1,650.1 13,620.8

307




21. PROPERTY, PLANT AND EqUIPMENT (CONTINUED)

The Company

Telecom-munications

Network RM

Movable Plant and

EquipmentRM

Computer Support Systems

RM

Land(sub-note (e))

RM

Buildings (sub-note (c))

RM

Capital Work-In-Progress

RM

Total Property, Plant and

Equipment RM

Net Book ValueAt1January2012 8,320.8 291.3 800.5 396.1 1,402.5 1,264.4 12,475.6Additions(sub-note(a)) 342.1 102.9 3.6 – 4.6 1,789.7 2,242.9Assetisation 1,544.6 15.4 162.5 – 124.0 (1,846.5) – Disposals* (0.4) (3.3) – – (49.9) – (53.6)Writeoff(note6(a)) (15.0) (0.3) – – (9.9) – (25.2)Depreciation(note6(a)) (1,297.6) (78.7) (328.4) (0.8) (114.2) – (1,819.7)Transfertonon-currentassetsheldforsale(note30) – – – (10.3) (2.9) – (13.2)Reclassification – (3.7) (4.9) (19.8) 28.0 0.4 – At 31 December 2012 8,894.5 323.6 633.3 365.2 1,382.2 1,208.0 12,806.8

At 31 December 2012Cost(sub-note(b)) 36,353.0 1,736.1 3,753.8 378.1 3,050.0 1,208.0 46,479.0Accumulateddepreciation (27,257.2) (1,412.5) (3,120.5) (10.3) (1,667.8) – (33,468.3)Accumulatedimpairment (201.3) – – (2.6) – – (203.9)Net Book Value 8,894.5 323.6 633.3 365.2 1,382.2 1,208.0 12,806.8


Aspreviouslyreported 7,549.7 293.4 746.6 187.2 1,381.6 1,624.0 11,782.5AdjustmentsarisingfromthetransitiontoMFRS

(note50(a)) – – – 203.3 – – 203.3At1January2011,asrestated 7,549.7 293.4 746.6 390.5 1,381.6 1,624.0 11,985.8Additions(sub-note(a)) 247.8 68.8 0.6 0.4 2.1 2,126.8 2,446.5Assetisation 1,962.5 19.6 354.6 6.9 142.8 (2,486.4) –Disposals# (3.8) (3.4) – (0.8) – – (8.0)Writeoff(note6(a)) (84.2) (1.2) (0.7) – (9.0) – (95.1)Depreciation(note6(a)) (1,360.4) (83.4) (304.2) (0.9) (104.7) – (1,853.6)Reclassification 9.2 (2.5) 3.6 – (10.3) – -At31December2011 8,320.8 291.3 800.5 396.1 1,402.5 1,264.4 12,475.6

At 31 December 2011Cost(sub-note(b)) 35,179.9 1,720.9 3,690.1 408.6 2,993.9 1,264.4 45,257.8Accumulateddepreciation (26,655.6) (1,429.6) (2,889.6) (9.9) (1,591.4) – (32,576.1)Accumulatedimpairment (203.5) – – (2.6) – – (206.1)NetBookValue 8,320.8 291.3 800.5 396.1 1,402.5 1,264.4 12,475.6

At 1 January 2011Cost(sub-note(b)) 33,948.2 1,702.0 3,707.7 402.1 2,888.1 1,624.0 44,272.1Accumulateddepreciation (26,187.0) (1,408.6) (2,961.1) (9.0) (1,506.5) – (32,072.2)Accumulatedimpairment (211.5) – – (2.6) – – (214.1)NetBookValue 7,549.7 293.4 746.6 390.5 1,381.6 1,624.0 11,985.8

* IncludedRM49.8millionbeingbuildingdisposedtoasubsidiary.# IncludedRM0.1millionbeingmovableplantandequipmentdisposedtoasubsidiary.

308




21. PROPERTY, PLANT AND EqUIPMENT (CONTINUED)(a) IncludedinadditionsoftheGroupandtheCompanyareborrowingcostsofRM24.7million(31December2011:RM9.4

million;1January2011:RM7.0million)directlyattributabletotheconstructionofqualifyingassets.

(b) Includedinproperty,plantandequipmentoftheGroupandtheCompanyarefullydepreciatedassetswhicharestillinusecostingRM21,364.5million(31December2011:RM21,130.4million;1January2011:RM20,919.9million)andRM21,207.4million(31December2011:RM21,014.7million;1January2011:RM20,816.1million)respectively.

(c) Includedinproperty,plantandequipmentoftheGroupandtheCompanyisanofficebuildingwithnetbookvalueofRM54.9million(31December2011:RM58.0million;1January2011:RM61.1million)whichisunderfinanceleasearrangement.

(d) TheCompanyperformsanannualreviewtoassesstheusefullivesofitsproperty,plantandequipment.Thisreviewtakesintoconsiderationchangesintechnology,latestfindingsinresearchanddevelopmentandupdatedpracticestoenhanceperformanceofcertainnetworkassets.Arisingfromthisreviewinthepreviousfinancialyear,theusefullivesofcertainnetworkequipmentshadbeenshortenedfrom15and7yearsto10and5yearswhilsttheusefullivesofcertainnetworkassetshadbeenextendedfromusefullivesrangingfrom7to20yearstoarangeof10to25yearseffectivefrom1October2011.ThenetimpactofthischangeinestimateswasalowerdepreciationchargeofRM58.6millioninthefourthquarter2011.

309




21. PROPERTY, PLANT AND EqUIPMENT (CONTINUED)(e) Detailsoflandareasfollows:

The GroupFreehold

RMLeasehold

RM

Other Land(sub-note

(ii))RM

Total RM

Net Book ValueAt1January2012 735.0 79.9 62.0 876.9Disposals (1.2) – – (1.2)Depreciation – (0.9) – (0.9)Transfertonon-currentassetsheldforsale(note30) (0.3) (10.0) – (10.3)Reclassification 9.9 – (29.7) (19.8)

At 31 December 2012 743.4 69.0 32.3 844.7

At 31 December 2012Cost 746.1 81.0 32.7 859.8Accumulateddepreciation – (12.0) (0.4) (12.4)Accumulatedimpairment (2.7) – – (2.7)

Net Book Value 743.4 69.0 32.3 844.7


Aspreviouslyreported 226.3 74.1 62.8 363.2AdjustmentsarisingfromthetransitiontoMFRS(note50(a)) 508.7 – – 508.7

At1January2011,asrestated 735.0 74.1 62.8 871.9Additions – 0.4 – 0.4Assetisation – 6.9 – 6.9Disposals – (1.2) – (1.2)Depreciation – (1.0) – (1.0)Impairment (0.1) – – (0.1)Reclassification 0.1 0.7 (0.8) –

At31December2011 735.0 79.9 62.0 876.9


NetBookValue 735.0 79.9 62.0 876.9

At 1 January 2011Cost 737.6 84.4 63.4 885.4Accumulateddepreciation – (10.3) (0.6) (10.9)Accumulatedimpairment (2.6) – – (2.6)

NetBookValue 735.0 74.1 62.8 871.9

310




21. PROPERTY, PLANT AND EqUIPMENT (CONTINUED)(e) Detailsoflandareasfollows:(continued)

The CompanyFreehold

RMLeasehold

RM

Other Land(sub-note

(ii))RM

Total RM

Net Book ValueAt1January2012 264.9 69.2 62.0 396.1Depreciation – (0.8) – (0.8)Transfertonon-currentassetsheldforsale(note30) (0.3) (10.0) – (10.3)Reclassification 9.9 – (29.7) (19.8)

At 31 December 2012 274.5 58.4 32.3 365.2


Net Book Value 274.5 58.4 32.3 365.2


Aspreviouslyreported 61.5 62.9 62.8 187.2AdjustmentsarisingfromthetransitiontoMFRS(note50(a)) 203.3 – – 203.3

At1January2011,asrestated 264.8 62.9 62.8 390.5Additions – 0.4 – 0.4Assetisation – 6.9 – 6.9Disposals – (0.8) – (0.8)Depreciation – (0.9) – (0.9)Reclassification 0.1 0.7 (0.8) –

At31December2011 264.9 69.2 62.0 396.1

At 31 December 2011Cost 267.5 78.5 62.6 408.6Accumulateddepreciation – (9.3) (0.6) (9.9)

Accumulatedimpairment (2.6) – – (2.6)NetBookValue 264.9 69.2 62.0 396.1

At 1 January 2011Cost 267.4 71.3 63.4 402.1Accumulateddepreciation – (8.4) (0.6) (9.0)Accumulatedimpairment (2.6) – – (2.6)

NetBookValue 264.8 62.9 62.8 390.5

311




21. PROPERTY, PLANT AND EqUIPMENT (CONTINUED)(e) Detailsoflandareasfollows:(continued)

(i) Leaseholdlandcomprisethefollowings:


31.12.2012RM

31.12.2011RM

1.1.2011RM

31.12.2012RM

31.12.2011RM

1.1.2011RM

Longtermleaseholdland 49.2 60.1 55.4 48.2 58.8 53.9

Shorttermleaseholdland 19.8 19.8 18.7 10.2 10.4 9.0

Total 69.0 79.9 74.1 58.4 69.2 62.9

Longtermleaseholdlandhasanunexpiredleaseperiodof50yearsandabove.

(ii) The title deeds pertaining to other land have not yet been registered in the name of the Company. Pendingfinalisationwiththerelevantauthorities,theselandshavenotbeenclassifiedaccordingtotheirtenures.

Theotherlandwillbereclassifiedaccordinglyasandwhenthetitledeedspertainingtotheselandshavebeenregistered.

22. INVESTMENT PROPERTY


2012RM

2011RM

2012RM

2011RM

Net Book ValueAt1January

Aspreviouslyreported – – 121.3 93.0AdjustmentsarisingfromthetransitiontoMFRS(note50(a)) – – – 26.6

At1January,asrestated – – 121.3 119.6Reclassificationfrominventories(note29) 5.7 – – –Additions – – – 3.8Depreciation(note6(a)) (0.1) – (2.2) (2.1)

At 31 December 5.6 – 119.1 121.3

At 31 DecemberCost 6.9 – 128.0 128.0Accumulateddepreciation (0.1) – (8.9) (6.7)Accumulatedimpairment (1.2) – – –

Net Book Value 5.6 – 119.1 121.3

312




22. INVESTMENT PROPERTY (CONTINUED)TheinvestmentpropertyoftheCompanycompriseofanofficebuildinglocatedonafreeholdlandwhich isrentedandoccupiedbyawhollyownedsubsidiary.ThepropertiesatGrouplevelrefertolandofawhollyownedsubsidiarywhichareheldforrentalpurposes.

ThefairvalueofthepropertyoftheGroupandtheCompanyat31December2012isRM12.6millionandRM122.0million(31December2011:RM123.2million;1January2011:RM123.2million)respectivelybasedonavaluationperformedbyanindependentprofessionalvaluer.Thevaluationwasbasedoncurrentpriceinanactivemarket.

23. INTANGIBLE ASSETS

The GroupGoodwill

RM

Other Intangibles*

RMTotal

RM

Net Book ValueAt1January2012 309.6 11.3 320.9Additions – 19.4 19.4Amortisation(note6(a)) – (18.2) (18.2)

At 31 December 2012 309.6 12.5 322.1

Net Book ValueAt1January2011 309.6 2.7 312.3Additions – 23.5 23.5Amortisation(note6(a)) – (14.9) (14.9)

At31December2011 309.6 11.3 320.9

At 31 December 2012Cost 314.6 49.6 364.2Accumulatedamortisation – (37.1) (37.1)Accumulatedimpairment (5.0) – (5.0)

Net Book Value 309.6 12.5 322.1

At 31 December 2011Cost 314.6 30.2 344.8Accumulatedamortisation – (18.9) (18.9)Accumulatedimpairment (5.0) – (5.0)

NetBookValue 309.6 11.3 320.9

313




23. INTANGIBLE ASSETS (CONTINUED)

The GroupGoodwill

RM

Other Intangibles*

RMTotal

RM

At 1 January 2011Cost 314.6 6.7 321.3Accumulatedamortisation – (4.0) (4.0)Accumulatedimpairment (5.0) – (5.0)

NetBookValue 309.6 2.7 312.3

* Otherintangiblescomprisethefairvalueofsalescontractsacquiredbyasubsidiaryin2007,andsoftwareandprogramrightsofothersubsidiaries.

Impairment test for goodwill

TheGroupundertakesanannualtestforimpairmentofitscash-generatingunits.Noimpairmentlosswasrequiredforthecarryingamountsofgoodwillassessedasat31December2012astheirrecoverableamountswereinexcessoftheircarryingamounts.

TheGroup’stotalgoodwillisattributabletothefollowingcash-generatingunits,beingthelowestlevelofassetforwhichthereareseparatelyidentifiablecashflows:

31.12.2012RM

31.12.2011RM

1.1.2011RM

VADSBerhad 308.4 308.4 308.4Others 1.2 1.2 1.2

309.6 309.6 309.6

Theamountofgoodwill initially recognised isdependentupon theallocationof thepurchaseprice to the fair valueofidentifiableassetsacquiredandtheliabilitiesassumed.Thedeterminationofthefairvalueoftheassetsandliabilitiesisbased,toaconsiderableextent,onmanagement’sjudgment.

(i) Key assumptions used in the value-in-use calculation for VADS Berhad (VADS)

Therecoverableamountofthecash-generatingunitincludinggoodwillinthistest,isdeterminedbasedonvalue-in-usecalculation.

Thisvalue-in-usecalculationappliesadiscountedcashflowmodelusingcashflowsprojectionbasedonforecastandprojectionapprovedbymanagementcoveringathree-yearperiodforVADS.Theforecastandprojectionreflectmanagement’sexpectationofrevenuegrowth,operatingcostsandmarginsforthecash-generatingunitbasedonpastexperience.CashflowsbeyondthethirdyearforVADSareextrapolatedusingestimatedterminalgrowthrate.Theratehasbeendeterminedwithregardstoprojectedgrowthrateforthemarketinwhichthecash-generatingunitparticipates.

Thediscountrateappliedtothecashflowsforecastisbenchmarkedagainstlocalpeersatthedateoftheassessmentofthecash-generatingunit.

314




23. INTANGIBLE ASSETS (CONTINUED)(i) Key assumptions used in the value-in-use calculation for VADS Berhad (VADS) (continued)

Thefollowingassumptionshavebeenappliedinthevalue-in-usecalculation:

31.12.2012 31.12.2011 1.1.2011

Pre-taxdiscountrate 12.1% 12.9% 12.4%Terminalgrowthrate 1.5% 1.5% 1.5%

(ii) Impact of possible change in key assumptions used for VADS

Changingtheassumptionsselectedbymanagement,inparticularthediscountrateassumptionusedinthediscountedcashflowmodelcouldsignificantlyaffecttheresultoftheimpairmenttestandconsequentlytheGroup’sresults.TheGroup’s review includes an impact assessment of changes in key assumptions. Based on the sensitivity analysisperformed,managementhasconcludedthatnoreasonablechangeinthebasecasekeyassumptionswouldcausethecarryingamountofthecash-generatingunittoexceeditsrecoverableamount.

Ifthefollowingpre-taxdiscountrateisappliedtothecashflowsforecastandprojectionoftheGroup’scash-generatingunit, thecarryingamountof thecash-generatingunit includinggoodwillwillequalthecorrespondingrecoverablevalue,assumingallothervariablesremainunchanged.

31.12.2012 31.12.2011 1.1.2011

Pre-taxdiscountrate 33.5% 34.0% 24.0%

315




24. SUBSIDIARIES

31.12.2012 31.12.2011 1.1.2011

The CompanyMalaysia

RMOverseas

RMTotal

RM Malaysia

RMOverseas

RMTotal

RM Malaysia

RMOverseas

RMTotal

RM

Unquotedinvestments,atcost(sub-note(a)) 1,310.3 22.0 1,332.3 1,391.3 22.0 1,413.3 1,391.5 22.0 1,413.5Accumulatedimpairment(sub-note(b)) (77.7) (13.2) (90.9) (77.7) (13.2) (90.9) (1.7) (13.2) (14.9)

1,232.6 8.8 1,241.4 1,313.6 8.8 1,322.4 1,389.8 8.8 1,398.6InvestmentinTMESOSManagementSdnBhd–atcost(sub-note(c)) 1,431.0 – 1,431.0 1,431.0 – 1,431.0 1,431.0 – 1,431.0–exerciseofoptions (411.1) – (411.1) (411.1) – (411.1) (411.1) – (411.1)–repaymentofcapitalcontribution (1,008.7) – (1,008.7) (1,008.7) – (1,008.7) (494.9) – (494.9)–accumulatedimpairment – – – – – – (321.7) – (321.7)–disposalofsharesattributedtolapsedoptions (11.2) – (11.2) (11.2) – (11.2) (3.1) – (3.1)

– – – – – – 200.2 – 200.2Optionsgrantedtoemployeesofsubsidiaries 24.3 – 24.3 24.3 – 24.3 24.6 – 24.6Unquotedinvestments,atwrittendownvalue

(sub-note(d)) – – – – – – – – –

NET INVESTMENTS IN SUBSIDIARIES 1,256.9 8.8 1,265.7 1,337.9 8.8 1,346.7 1,614.6 8.8 1,623.4

(a) On28September2012,MenaraKualaLumpurSdnBhd,awhollyownedsubsidiary,madeacapitalrepaymentofRM81.0millionuponapprovalbytheKualaLumpurCourton28August2012pursuanttoSection64oftheCompaniesAct,1965.

(b) Duringthelastfinancialyear,consequenttotheCompany’sassessmentoftherecoverableamountfromitsinvestmentsinsubsidiaries,animpairmentlossofRM76.0millionwasrecognisedinrespectofawhollyownedsubsidiary.

(c) ThisrepresentsthefairvalueofSpecialESOSsharesissuedtoTMESOSManagementSdnBhd(TEM)asexplainedinnote13(e)tothefinancialstatements,therebymakingTEMasubsidiaryaswellasashareholderoftheCompany.

Duringthe lastfinancialyear,TEMmadearepaymentofcapitalcontributionofRM513.8million (1January2011:RM446.0million)beingproceedsfromthedisposalofAxiatasharesattributedtothelapsedoptionsunderSpecialESOS.

Following an assessment of the carrying value of the Company’s investment in TEM, an impairment reversal ofRM321.7millionwasmadeinthelastfinancialyeartoequityasitrepresentsatransactionwithashareholder.

(d) InvestmentsincertainsubsidiarieshavebeenwrittendowntorecoverableamountofRM1.00each.

TheGroup’seffectiveequityinterestinthesubsidiaries,theirrespectiveprincipalactivitiesandcountriesofincorporationarelistedinnote51tothefinancialstatements.

316




25. LOANS AND ADVANCES TO SUBSIDIARIESLoansandadvancestosubsidiariesofRM260.4million(31December2011:RM219.7million;1January2011:RM236.7million)representshareholderloansandadvancesforworkingcapitalpurposes.Theseloansandadvancesareunsecuredandbearinterestrangingfrom2.72%to4.40%(31December2011:4.43%to4.44%;1January2011:4.16%to5.35%)andwillmaturebetween3to5years.

26. ASSOCIATES

The Group31.12.2012

RM31.12.2011

RM1.1.2011

RM

ShareofnetassetsofassociatesUnquotedinvestments 1.5 0.6 0.5

TOTAL 1.5 0.6 0.5

TheGroup’sshareofrevenueandprofitofassociatesisasfollows:

Revenue 9.1 3.5 3.3Profit/(Loss)aftertaxation 0.9 0.1 (0.1)

TheGroup’sshareofassetsandliabilitiesofassociatesisasfollows:

Non-currentassets 0.1 0.1 0.1Currentassets 2.4 1.4 1.6Currentliabilities (1.0) (0.9) (1.2)

Netassets 1.5 0.6 0.5

TheGrouphasnotrecognisedtheshareoflossaftertaxationofanassociateamountingtoRM1.1million(31December2011&1January2011:RM1.1million)inrespectofthecumulativefinancialyear.Thereisnoadditionalshareoflossnotrecognisedinthecurrentandcomparativefinancialyears.

TheGroup’seffectiveequityinterestintheassociates,theirrespectiveprincipalactivitiesandcountriesofincorporationarelistedinnote52tothefinancialstatements.

317




27. AVAILABLE-FOR-SALE INVESTMENTS

The Group

Investment in Axiata

Shares RM

Investmentin Unquoted

EquitySecurities

RM

Investment in FixedIncome

Securities RM

TotalRM

At1January2012 # 104.8 418.1 522.9Additions – – 513.0 513.0Fairvaluechangestransferredtoothercomprehensiveincome # (6.1) 0.8 (5.3)Otherdisposals (#) – (431.3) (431.3)

At 31 December 2012 – 98.7 500.6 599.3

Currentportion – – 500.6 500.6Non-currentportion – 98.7 – 98.7

TOTAL AVAILABLE-FOR-SALE INVESTMENTS – 98.7 500.6 599.3

At1January2011–Currentportion 481.9 – 356.2 838.1–Non-currentportion – 114.6 – 114.6Additions – 0.1 383.5 383.6Fairvaluechangestransferredtoothercomprehensiveincome 31.9 (9.9) 4.8 26.8DisposalofAxiatasharesattributedtolapsedoptions

(sub-note(i)&note8) (513.8) – – (513.8)Otherdisposals – – (326.4) (326.4)

At31December2011 # 104.8 418.1 522.9

Currentportion # – 418.1 418.1Non-currentportion – 104.8 – 104.8

TOTALAVAILABLE-FOR-SALEINVESTMENTS # 104.8 418.1 522.9


(i) DisposalofAxiatasharesattributedtolapsedoptionsundertheEmployees’ShareOptionScheme(SpecialESOS).

318




27. AVAILABLE-FOR-SALE INVESTMENTS (CONTINUED)

The Company

Investment in Unquoted

EquitySecurities

RM

Investment in Fixed Income

Securities RM

Total RM

At1January2012 104.7 418.1 522.8Additions – 513.0 513.0Fairvaluechangestransferredtoothercomprehensiveincome (6.1) 0.8 (5.3)Otherdisposals – (431.3) (431.3)

At 31 December 2012 98.6 500.6 599.2

Currentportion – 500.6 500.6Non-currentportion 98.6 – 98.6

TOTAL AVAILABLE-FOR-SALE INVESTMENTS 98.6 500.6 599.2

At1January2011–Currentportion – 356.2 356.2–Non-currentportion 114.6 – 114.6Additions – 383.5 383.5Fairvaluechangestransferredtoothercomprehensiveincome (9.9) 4.8 (5.1)Otherdisposals – (326.4) (326.4)

At31December2011 104.7 418.1 522.8

Currentportion – 418.1 418.1Non-currentportion 104.7 – 104.7

TOTALAVAILABLE-FOR-SALEINVESTMENTS 104.7 418.1 522.8

Thecurrencyexposureprofileofavailable-for-saleinvestmentsisasfollows:


31.12.2012RM

31.12.2011RM

1.1.2011RM

31.12.2012RM

31.12.2011RM

1.1.2011RM

RinggitMalaysia 504.3 421.9 841.7 504.2 421.8 359.8USDollar 45.7 43.9 60.6 45.7 43.9 60.6SingaporeDollar 49.3 57.1 50.4 49.3 57.1 50.4

599.3 522.9 952.7 599.2 522.8 470.8

The maximum exposure to credit risk at the reporting date is the carrying amount of the investment in fixed incomesecurities.

319




27. AVAILABLE-FOR-SALE INVESTMENTS (CONTINUED)Thecreditqualityofinvestmentinfixedincomesecuritiesisasfollows:


31.12.2012RM

31.12.2011RM

1.1.2011RM

AAA 101.2 100.8 120.1AA 322.5 229.2 187.3A 30.9 50.5 34.6P1 29.2 4.9 –MARC-1 9.9 18.7 –MalaysianGovernmentSecurities 6.1 8.3 13.3BB(sub-note(a)) 0.8 – –BBB(sub-note(a)) – 0.7 0.9P2 – 5.0 –

500.6 418.1 356.2

(a) The credit rating of the issuer was downgraded from AA to BBB and then to BB in the current financial yearsubsequenttotheCompany’sinvestment.

28. AVAILABLE-FOR-SALE/OTHER NON-CURRENT RECEIVABLES (a) Available-for-sale receivables

The Group and Company2012

RM2011

RM

At1January 31.1 36.1Additions(includinginterest) 1.7 1.9Repayments (5.3) (6.6)Conversiontoscholarship – (0.6)Fairvaluechangestransferredtoothercomprehensiveincome (1.1) 0.3

At31December 26.4 31.1Impairment (18.8) (20.0)

TOTAL AVAILABLE-FOR-SALE RECEIVABLES (net) 7.6 11.1

Movementintheimpairmentaccountisasfollows:

At1January (20.0) (21.2)Impairmentreversal(note6(b)) 1.2 1.2

At 31 December (18.8) (20.0)

320




28. AVAILABLE-FOR-SALE/OTHER NON-CURRENT RECEIVABLES (CONTINUED)(a) Available-for-sale receivables (continued)

Available-for-salereceivablesoftheCompanyareinrespectofeducationloansprovidedtoundergraduatesandareconvertibletoscholarshipsifcertainperformancecriteriaaremet.Theloansarecontractuallyinterestfreeandifnotconvertedtoscholarshipwillberepayableoveraperiodofnotmorethan11years.

Asof31December2012,alloverdueamountshavebeenimpaired.

Duringthefinancialyear,thereisnoconversiontoscholarships.Inthelastfinancialyear,RM0.6millionwasconvertedtoscholarshipsandwasconsequentlyexpensedofftotheIncomeStatementunderotheroperatingcosts.

TheCompanydoesnotholdanycollateralforsecurityinrespectofeducationloans.

(b) Other non-current receivables


31.12.2012RM

31.12.2011RM

1.1.2011RM

31.12.2012RM

31.12.2011RM

1.1.2011RM

Staffloansatamortisedcost–underIslamicprinciples 29.8 31.7 41.3 29.8 31.7 41.3–underconventional

principles 1.8 3.0 5.5 1.6 2.8 5.2

Totalstaffloans(sub-note(i)) 31.6 34.7 46.8 31.4 34.5 46.5Othernon-currentreceivables–otherdeposits(sub-note(ii)) 72.4 53.5 43.8 72.4 53.5 43.8–taxrecoverable

(sub-note(iii)) 113.8 113.8 – 113.8 113.8 ––others(sub-note(iv)) 38.0 – – – – –

255.8 202.0 90.6 217.6 201.8 90.3Prepaidemployeebenefits 1.2 2.4 5.3 1.2 2.4 5.3

257.0 204.4 95.9 218.8 204.2 95.6Staffloansreceivablewithin

twelvemonthsincludedunderotherreceivables(note32) (4.7) (4.9) (6.5) (4.6) (4.7) (6.2)

TOTAL OTHER NON-CURRENT RECEIVABLES 252.3 199.5 89.4 214.2 199.5 89.4

321




28. AVAILABLE-FOR-SALE/OTHER NON-CURRENT RECEIVABLES (CONTINUED)(b) Other non-current receivables (continued)

(i) Staff loans comprise housing, vehicle, computer and club membership loans offered to employees withcontractualfinancingcostof4.0%perannumonareducingbalancebasisexceptforclubmembershiploanswhich are free of financing cost. There is no single significant credit risk exposure as the amount is mainlyreceivablefromindividuals.Staffloansinclusiveoffinancingcost,arerepayableinequalmonthlyinstalmentsasfollows:

• Housingloans–25yearsoruponemployeesattaining55yearsofage,whicheverisearlier• Vehicleloans–maximumof8yearsfornewcarsand6yearsforsecondhandcars• Computerloans–3years

Creditriskarisingfromstaffloansismitigatedbytheenforcementofsalarydeductionsasamodeofrepayment.Inaddition,collateralisobtainedforthefollowing:

• Housingloans–registeredlandchargesandassignmentsoverthepropertiesfinanced• Vehicleloans–ownershipclaimsoverthevehiclesfinanced

Duringthecurrentfinancialyear,theCompanydisposedRM11.9million(31December2011:RM15.6million;1January2011:RM21.4million)ofitsemployeeshousingloansforatotalcashconsiderationofRM11.3million(31December2011:RM14.4million;1January2011:RM19.3million)pursuanttotheSaleandPurchase(S&P)Agreemententeredon27May2009withAmMortgageOneBerhad(AmMortgageOne),awhollyownedsubsidiaryof AmBank (M) Berhad (AmBank). In tandem with the S&P Agreement, a Servicing Agreement between theCompany,AmMortgageOneandAmBankwasalsoexecuted.ThearrangementreflectstheoutsourcingoftheCompany’smortgageservicingoperationstoAmBank.

Thedisposalin2009includedloanportfolioofemployeeswheretherepaymenttermsgobeyondtheemployees’retirement age. This loan portfolio was not derecognised as the credit risk in the event of default after theemployees’retirementage,remainswiththeCompany.

Thecarryingamountoftheloanportfolioanditsfairvalueareasfollows:


31.12.2012 31.12.2011 1.1.2011

Carrying amount

RM

Fair value

RM

Carrying amount

RM

Fair value

RM

Carrying amount

RM

Fair value

RM

Staffloansatamortisedcost 2.5 2.3 4.0 3.7 6.1 5.7

Otherborrowings(note16) (2.5) (2.5) (4.0) (4.1) (6.1) (6.2)

Netamount – (0.2) – (0.4) – (0.5)

322




28. AVAILABLE-FOR-SALE/OTHER NON-CURRENT RECEIVABLES (CONTINUED)(b) Other non-current receivables (continued)

(ii) Otherdepositscomprisedepositandaccrued interestrelatingtothenon-cancellableoperating leaseof fourofficebuildingsandalongtermdeposit.

Duringthelastfinancialyear,theCompanyenteredintotwoRinggitMalaysiadepositagreementswithmaturityon1August2025,underwhichtheCompanywilldepositRM4.1millionandRM4.2millionrespectivelyeverysixmonthsuntilthedeposits’maturitydatewhentheCompanywillbeentitledfordepositsrepaymentsofRM154.0millionandRM156.5millionrespectively.ThedepositsarecollateralisedbyMalaysianGovernmentBonds.

ThedepositseffectivelybuildupasinkingfundwithanassuredvalueofRM154.0millionandRM156.5millionrespectivelyon1August2025fortherepaymentoftheCompany’sDebentures.

(iii) Thiscomprisetaxcreditinrespectofprioryearsarisingfromthelastmilebroadbandtaxincentiveasexplainedinnote19tothefinancialstatements,tobeoffsetagainstthetaxpayablesforyearsofassessment2014to2016.

(iv) Comprisepresentvalueofreceivablesforlanddisposedbyawhollyownedsubsidiarydueovertheremainingcontractualperiodofthejointlanddevelopmentagreement.

29. INVENTORIES


31.12.2012RM

31.12.2011RM

1.1.2011RM

31.12.2012RM

31.12.2011RM

1.1.2011RM

Cablesandwires 23.9 31.7 27.3 23.9 31.7 27.3Networkmaterials 16.4 21.7 27.0 16.4 21.7 25.5Telecommunicationsequipment 40.7 52.0 34.0 40.6 52.1 34.0Sparesandothers* 83.6 63.2 33.8 45.4 34.8 17.0Landheldforproperty

development 69.7 108.4 107.4 – – –Landheldforsale 1.0 48.3 51.9 – – –

TOTAL INVENTORIES 235.3 325.3 281.4 126.3 140.3 103.8

* Includedinsparesandothersaretradinginventoriescomprisingprepaidcards,telephonesets,networkequipments,otherconsumablesandcapacityforresalepurposes.

323




30. NON-CURRENT ASSETS HELD FOR SALEDuringthefinancialyear,thecompanyfinalisedaseriesofSalesandPurchaseAgreementsforthedisposalofanumberoffreeholdandleaseholdlandsaswellasbuildingsforatotalconsiderationofRM57.2million.Consequently,thecarryingvalueoftheselandsandbuildingshavebeenreclassifiedasnon-currentassetsheldforsaleasfollows:


Carrying amount

immediately before

reclassification RM

Remeasurement RM

Disposal RM

Carrying amount

as at31 December

2012RM

Transferfromproperty,plantandequipment(note21)Land–Freehold 0.3 – – 0.3–Leasehold 10.0 – (4.3) 5.7Buildings 2.9 – (0.9) 2.0

13.2 – (5.2) 8.0

ThelandandbuildingsarepresentedaspartoftheSharedServices/Otherssegment.

31. CUSTOMER ACqUISITION COSTS

The Group and Company2012

RM2011

RM

At1January 106.1 87.1Additions 127.7 101.3CreditedtotheIncomeStatement (133.7) (82.3)

At 31 December 100.1 106.1

324




32. TRADE AND OTHER RECEIVABLES


31.12.2012RM

31.12.2011RM

1.1.2011RM

31.12.2012RM

31.12.2011RM

1.1.2011RM

Receivablesfromtelephonecustomers 1,718.2 1,546.6 1,291.3 1,431.9 1,264.5 998.3

Receivablesfromnon-telephonecustomers 933.1 1,285.8 1,653.0 490.1 904.6 1,029.7

Receivablesfromsubsidiaries – – – 70.5 55.3 216.5

2,651.3 2,832.4 2,944.3 1,992.5 2,224.4 2,244.5Impairmentoftradereceivables (1,387.7) (1,384.4) (1,139.9) (975.2) (963.3) (689.2)

1,263.6 1,448.0 1,804.4 1,017.3 1,261.1 1,555.3Accruedearnings 477.3 406.8 291.6 395.4 376.3 267.2

Totaltradereceivables(net) 1,740.9 1,854.8 2,096.0 1,412.7 1,637.4 1,822.5

Prepayments 147.1 120.3 124.3 91.9 83.0 88.6Taxrecoverable 112.1 101.0 124.3 75.8 63.8 123.1Staffloans(note28(b)) 4.7 4.9 6.5 4.6 4.7 6.2Otherreceivablesfromsubsidiaries – – – 99.2 131.1 157.8Otherreceivablesfromassociates 1.0 1.1 1.1 1.0 1.1 1.1Otherreceivables 244.1 301.2 341.6 205.7 289.0 321.7Impairmentofotherreceivables (42.9) (60.1) (65.5) (37.3) (51.1) (57.0)

Totalotherreceivables(net) 466.1 468.4 532.3 440.9 521.6 641.5

TOTAL TRADE AND OTHER RECEIVABLES (net) 2,207.0 2,323.2 2,628.3 1,853.6 2,159.0 2,464.0

325




32. TRADE AND OTHER RECEIVABLES (CONTINUED)Movementsintheimpairmentaccountsoftradeandotherreceivablesareasfollows:


2012RM

2011RM

2012RM

2011RM

(a) Trade receivablesAt1January 1,384.4 1,139.9 963.4 689.2Impairment 93.4 62.8 97.5 93.4Receivablesgrossupadjustment – 221.0 – 221.0Receivableswrittenoffasuncollectible (89.7) (38.2) (85.7) (40.3)Disposalofaformersubsidiary – (1.5) – –Foreignexchangedifference (0.4) 0.4 – –

At 31 December 1,387.7 1,384.4 975.2 963.3

(b) Other receivablesAt1January 60.1 65.5 51.1 57.0Net(reversal)/impairment (15.2) 13.0 (11.8) 12.5Receivableswrittenoffasuncollectible (2.0) (18.4) (2.0) (18.4)

At 31 December 42.9 60.1 37.3 51.1

Thecreationandreleaseofimpairedreceivableshasbeenincludedin‘otheroperatingcosts’ontheIncomeStatement(note6(b)tothefinancialstatements).Amountschargedtotheimpairmentaccountsaregenerallywrittenoff,whenthereisnoexpectationofrecoveringadditionalcash.

Theotherclasseswithintradeandotherreceivablesdonotcontainimpairedassets.

326




32. TRADE AND OTHER RECEIVABLES (CONTINUED)TradereceivablesofRM466.6million(31December2011:RM796.5million;1January2011:RM918.9million)andRM387.0million(31December2011:RM686.1million;1January2011:RM910.1million)fortheGroupandtheCompanyrespectivelywerepastduebutnotimpaired.Theserelatetoanumberofindependentcustomersforwhomthereisnorecenthistoryofdefault.Theageinganalysisofthesetradereceivablesisasfollows:

Past due but not impaired

The GroupNot past due

RM1 to 3 months

RM4 to 6 months

RM>6 months

RMTotal

RM

31.12.2012Collectivelyassessed 384.2 109.2 25.0 17.0 535.4Individuallyassessed 412.8 188.3 50.7 76.4 728.2

797.0 297.5 75.7 93.4 1,263.6

31.12.2011Collectivelyassessed 389.2 56.4 40.3 17.6 503.5Individuallyassessed 262.3 304.8 248.1 129.3 944.5

651.5 361.2 288.4 146.9 1,448.0

1.1.2011Collectivelyassessed 375.0 104.1 56.0 18.8 553.9Individuallyassessed 510.5 344.5 262.0 133.5 1,250.5

885.5 448.6 318.0 152.3 1,804.4

Past due but not impaired

The CompanyNot past due

RM1 to 3 months

RM4 to 6 months

RM>6 months

RMTotal

RM

31.12.2012Collectivelyassessed 346.3 108.0 22.9 15.6 492.8Individuallyassessed 256.5 135.4 24.8 45.0 461.7Amountduefromsubsidiaries 27.5 12.5 9.5 13.3 62.8

630.3 255.9 57.2 73.9 1,017.3


575.0 307.6 244.2 134.3 1,261.1


645.2 436.9 321.8 151.4 1,555.3

327




32. TRADE AND OTHER RECEIVABLES (CONTINUED)Ananalysisoftradereceivablesthatareneitherpastduenorimpairedisasfollows:


31.12.2012RM

31.12.2011RM

1.1.2011RM

31.12.2012RM

31.12.2011RM

1.1.2011RM

Global 90.4 106.7 71.3 85.8 99.3 67.8Wholesale 43.8 39.1 60.3 8.3 15.5 35.1Retail–Consumer 180.7 205.5 186.4 180.3 203.6 182.7Retail–SME 166.0 161.3 149.0 166.0 161.3 149.0Retail–Enterprise 42.2 21.3 57.0 42.2 21.3 57.0Retail–Government 161.4 63.6 262.3 120.2 59.7 109.8Amountduefromsubsidiaries – – – 27.5 14.3 43.8Others* 112.5 54.0 99.2 – – –

797.0 651.5 885.5 630.3 575.0 645.2

* Othersmainlycomprisestudentdebtorsandreceivablesfortheprovisionofmanagednetworkservices,informationtechnologyandsystemintegrationservicesofsubsidiaries.

TheGroupandtheCompanyarenotexposedtomajorconcentrationsofcreditriskduetothediversedcustomerbase.Theanalysisoftradereceivablesbylinesofbusinessisconsideredthemostappropriatedisclosureofcreditconcentration.Inaddition,creditriskismitigatedtoacertainextentbycashdeposits(note36tothefinancialstatements)andbankers’guaranteeobtainedfromcustomersamountingtoRM18.1million(31December2011:RM12.3million;1January2011:RM11.4million).TheGroupandtheCompanyconsidertheimpairmentatthereportingdatetobeadequatetocoverthepotentialfinancialloss.

TradereceivablesthatareindividuallyassessedforimpairmentarethoseunderGlobal,Wholesale,Retail–EnterpriseandRetail–Governmentlinesofbusiness.

Credit terms of trade receivables excluding accrued earnings range from 30 to 90 days (31 December 2011 &1January2011:30to90days).

Themaximumexposuretocreditriskatthereportingdateisthecarryingamountofeachclassofreceivablementionedabove.

328




32. TRADE AND OTHER RECEIVABLES (CONTINUED)Thecurrencyexposureprofileoftradeandotherreceivablesafterimpairmentisasfollows:


31.12.2012RM

31.12.2011RM

1.1.2011RM

31.12.2012RM

31.12.2011RM

1.1.2011RM

RinggitMalaysia 1,800.4 1,834.1 2,069.6 1,475.0 1,686.4 1,856.4USDollar 382.4 452.7 534.8 369.4 443.2 594.4SpecialDrawingRights 2.1 24.5 7.5 2.1 24.5 7.5Othercurrencies 22.1 11.9 16.4 7.1 4.9 5.7

2,207.0 2,323.2 2,628.3 1,853.6 2,159.0 2,464.0

33. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS


31.12.2012RM

31.12.2011RM

1.1.2011RM

EquitysecuritiesquotedontheBursaMalaysiaSecuritiesBerhad 16.5 20.1 21.5

TOTAL FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 16.5 20.1 21.5

Marketvalueofquotedequitysecurities 16.5 20.1 21.5

329




34. CASH AND BANK BALANCES


31.12.2012RM

31.12.2011RM

1.1.2011RM

31.12.2012RM

31.12.2011RM

1.1.2011RM

Depositswith:Licensedbanks 525.1 1,778.4 1,719.2 488.1 1,745.2 1,656.8Otherfinancialinstitutions 42.0 116.6 116.5 13.3 88.0 96.3

DepositsunderIslamicprinciples 2,695.3 1,682.1 1,215.6 2,532.6 1,540.0 1,124.0

Totaldeposits 3,262.4 3,577.1 3,051.3 3,034.0 3,373.2 2,877.1Cashandbankbalances 440.1 605.3 423.8 187.7 355.8 200.6Cashandbankbalancesunder

Islamicprinciples 36.2 30.6 13.4 19.9 – –

TOTAL CASH AND BANK BALANCES 3,738.7 4,213.0 3,488.5 3,241.6 3,729.0 3,077.7

Less:Depositspledged (0.4) (0.4) (0.5) – – –

TOTAL CASH AND CASH EqUIVALENTS 3,738.3 4,212.6 3,488.0 3,241.6 3,729.0 3,077.7

Thecurrencyexposureprofileofcashandbankbalancesisasfollows:

RinggitMalaysia 3,595.2 4,109.2 3,379.8 3,200.3 3,691.5 3,037.1USDollar 117.2 88.6 99.6 41.3 37.5 40.6Othercurrencies 26.3 15.2 9.1 – – –

3,738.7 4,213.0 3,488.5 3,241.6 3,729.0 3,077.7

Thedepositsareplacedmainlywithanumberofcreditworthyfinancialinstitutions.Thereisnomajorconcentrationofdepositsinanysinglefinancialinstitution.Thecreditqualityofthefinancialinstitutionsinwhichcashanddepositsareplacedisasfollows:


31.12.2012RM

31.12.2011RM

1.1.2011RM

31.12.2012RM

31.12.2011RM

1.1.2011RM

AAA 953.1 1,343.5 1,294.4 707.5 1,050.6 987.9AA 1,779.7 2,247.7 1,243.8 1,611.9 2,120.7 1,162.6A 705.5 319.0 832.4 649.4 264.2 821.4NR(sub-note(a)) 300.4 302.8 117.9 272.8 293.5 105.8

3,738.7 4,213.0 3,488.5 3,241.6 3,729.0 3,077.7

(a) Mainlycomprisedepositswithotherfinancialinstitutionswithsovereignequivalentrating.

330




34. CASH AND BANK BALANCES (CONTINUED) Depositshavematuritiesrangingfromovernightto90days(31December2011:fromovernightto92days;1January2011:

fromovernightto90days)fortheGroupandtheCompany.Bankbalancesaredepositsheldatcallwithbanks.

Theweightedaverageinterestrateofdepositsasat31December2012was3.48%(31December2011:3.48%;1January2011:3.22%)and3.51%(31December2011:3.50%;1January2011:3.22%)fortheGroupandtheCompanyrespectively.

35. TRADE AND OTHER PAYABLES


31.12.2012RM

31.12.2011RM

1.1.2011RM

31.12.2012RM

31.12.2011RM

1.1.2011RM

Tradepayablesandaccruals 2,219.6 2,302.8 2,403.2 1,986.5 2,079.3 2,171.3PayableforUniversalService

Provision 297.9 385.0 419.0 270.0 344.1 392.5Deferredrevenue 115.3 92.3 98.1 38.6 25.0 35.8Financecostpayable 58.9 57.8 51.5 58.9 57.8 51.4Dutiesandothertaxespayable 41.8 42.4 15.0 27.9 32.7 12.0Depositsandtrustmonies 76.0 64.2 62.7 43.9 39.3 36.7Payablestosubsidiaries

(sub-note(a)) – – – 496.8 661.6 620.2Otherpayablesandaccruals 736.0 607.6 589.7 553.9 430.7 405.5

TOTAL TRADE AND OTHER PAYABLES 3,545.5 3,552.1 3,639.2 3,476.5 3,670.5 3,725.4

Thecurrencyexposureprofileoftradeandotherpayablesisasfollows:

RinggitMalaysia 3,214.7 3,180.3 3,191.0 3,155.3 3,294.8 3,299.3USDollar 319.8 354.6 435.7 309.4 367.8 419.1SpecialDrawingRights – 6.3 4.0 – 6.3 4.0Othercurrencies 11.0 10.9 8.5 11.8 1.6 3.0

3,545.5 3,552.1 3,639.2 3,476.5 3,670.5 3,725.4

(a) IncludeexcessfundsofsubsidiariesmanagedandinvestedbytheCompany,whichareinterestbearingasdisclosedinnote41(f)tothefinancialstatements.

Credittermsoftradeandotherpayablesexcludingaccrualsvaryfrom30to90days(31December2011&1January2011:30to90days)dependingonthetermsofthecontracts.

331




36. CUSTOMER DEPOSITS


31.12.2012RM

31.12.2011RM

1.1.2011RM

31.12.2012RM

31.12.2011RM

1.1.2011RM

Telephoneservices 513.8 542.9 559.3 513.8 542.8 559.2Dataservices 4.4 1.6 21.2 4.0 1.0 20.9

TOTAL CUSTOMER DEPOSITS 518.2 544.5 580.5 517.8 543.8 580.1

Customerdepositsfortelephoneservicesaresubjecttorebateat2.5%perannumeffective1April2010inaccordancewiththeprovisionsofCommunicationsandMultimedia(Rates)Rules2002.Customerdepositsarerepayableondemandasandwhenthecustomersterminatetheirservices.

37. CASH FLOWS FROM OPERATING ACTIVITIES


2012RM

2011RM

2012RM

2011RM

Receiptsfromcustomers 9,817.3 9,188.3 8,891.9 8,257.4Paymentstosuppliersandemployees (6,693.3) (5,988.0) (6,385.3) (5,587.5)Paymentsoffinancecost (331.8) (312.6) (330.7) (311.2)(Payments)/Refundsofincometaxesandzakat(net) (68.5) 143.0 (26.2) 200.7

TOTAL CASH FLOWS FROM OPERATING ACTIVITIES 2,723.7 3,030.7 2,149.7 2,559.4

332




38. CASH FLOWS USED IN INVESTING ACTIVITIES


2012RM

2011RM

2012RM

2011RM

Contributionforpurchaseofproperty,plantandequipment 251.9 772.6 251.9 772.6Disposalofproperty,plantandequipment 10.9 17.6 59.3 16.4Purchaseofproperty,plantandequipment (2,547.9) (2,735.0) (2,232.2) (2,582.2)Disposalofavailable-for-saleinvestments 432.0 840.2 432.0 326.4Purchaseofavailable-for-saleinvestments (513.0) (383.6) (513.0) (383.5)Disposaloffinancialassetsatfairvaluethroughprofitorloss 0.5 0.8 0.5 0.8Disposalofnon-currentassetsheldforsale 10.4 – 10.4 –Disposalofaformersubsidiary* – (2.3) – –Longtermdeposits (16.6) (8.3) (16.6) (8.3)Repaymentsofcapitalcontributionfromsubsidiaries – – 81.0 513.8Repaymentsfromsubsidiaries –loansandadvances – – 72.0 17.0 –otherreceivables – – 104.8 125.1Advancestosubsidiaries – – (120.1) (67.0)RepaymentstosubsidiariesforInter-CompanyFund

Optimisation(ICFO) – – (1,009.6) (685.8)ReceiptsfromsubsidiariesforICFO – – 928.1 728.8Repaymentsofloansbyemployees 12.4 12.9 11.9 12.7Loanstoemployees (17.5) (10.7) (17.1) (10.6)Disposalofhousingloan 11.3 14.4 11.3 14.4Interestsreceived 136.4 125.7 128.9 118.3Dividendsreceived 1.3 17.7 106.2 99.2

TOTAL CASH FLOWS USED IN INVESTING ACTIVITIES (2,227.9) (1,338.0) (1,710.3) (991.9)

* Netofcashandcashequivalentsdisposed

333




39. CASH FLOWS USED IN FINANCING ACTIVITIES


2012RM

2011RM

2012RM

2011RM

Issueofsharecapital – 34.8 – 34.8RedemptionofRedeemablePreferenceShares(note13(c)) – (1,037.4) – (1,037.4)Capitalrepayment(note13(d)) (1,073.2) – (1,073.2) –Capitalreturntonon-controllinginterestsonwindingupofa

subsidiary (0.6) – – –Proceedsfromborrowings 1,479.4 1,268.3 1,476.4 1,268.3Repaymentsofborrowings (632.0) (493.0) (629.1) (471.6)Repaymentsoffinancelease (3.6) (3.4) (3.6) (3.4)Dividendspaidtoshareholders (701.2) (702.1) (701.2) (702.1)Dividendspaidtominorityinterests (39.3) (29.7) – –

TOTAL CASH FLOWS USED IN FINANCING ACTIVITIES (970.5) (962.5) (930.7) (911.4)

40. SIGNIFICANT NON-CASH TRANSACTIONSSignificantnon-cashtransactionsduringthefinancialyearareasfollows:


2012RM

2011RM

2012RM

2011RM

(a) Contrasettlementswithsubsidiariesbetweentradeandotherreceivablesandtradeandotherpayables – – 3.2 18.6

(b) Contrasettlementswithcustomerscumsuppliersbetweentradereceivablesandtradepayables 78.8 69.7 78.8 69.7

334




41. SIGNIFICANT RELATED PARTY DISCLOSURESKhazanahNasionalBerhad(Khazanah)isamajorshareholderwith28.73%(2011:28.73%)equityinterestandisarelatedpartyoftheGroupandtheCompany.KhazanahisawhollyownedentityofMoFInc,whichisinturnownedbytheMinistryofFinance,aministryoftheFederalGovernmentofMalaysia.Therefore,theGovernmentofMalaysiaandbodiescontrolledorjointlycontrolledbytheGovernmentofMalaysiaarealsorelatedpartiestotheGroupandtheCompany.

TherewerenoindividuallysignificanttransactionsandcommitmentswithotherGovernment-relatedentitiesotherthanthesalesoftelecommunicationsrelatedservicesofRM670.9million(2011:RM328.1million)andRM320.4million(2011:RM143.4million)fortheGroupandtheCompanyrespectively.Receivablesfromthesalesoftelecommunicationsrelatedservices as at 31 December 2012 amounted to RM102.3 million (31 December 2011: RM43.3 million; 1 January 2011:RM151.5million)andRM64.7million(31December2011:RM8.6million;1January2011:RM11.2million)fortheGroupandtheCompanyrespectively.

Inadditiontotheabove,theGroupandtheCompanyhavetransactionsthatarecollectively,butnotindividuallysignificantwith other Government-related entities in respect of the provision of telecommunications related services as well asprocurementoftelecommunicationsandrelatedequipmentsandservicesinthenormalcourseofbusiness.

TheCompanyalsohassignificantrelatedpartytransactionswithitssubsidiaries,aslistedbelow:

FiberailSdnBhd TelekomSalesandServicesSdnBhdFibrecommNetwork(M)SdnBhd TMESOSManagementSdnBhdGITNSdnBerhad TMFacilitiesSdnBhdMeganetCommunicationsSdnBhd TMFAutoleaseSdnBhdMenaraKualaLumpurSdnBhd TMGlobalIncorporatedTelekomAppliedBusinessSdnBhd TMInfo-MediaSdnBhdTelekomMalaysia(HongKong)Limited TMNetSdnBhdTelekomMalaysia(S)PteLtd UniversitiTelekomSdnBhdTelekomMalaysia(UK)Limited VADSBerhadTelekomMalaysia(USA)Inc VADSe-ServicesSdnBhdTelekomMulti-MediaSdnBhd VADSSolutionsSdnBhdTelekomResearch&DevelopmentSdnBhd VADSBusinessProcessSdnBhd

Keymanagementpersonnelarethepersonswhohaveauthorityandresponsibilityforplanning,directingandcontrollingtheactivitiesof theGroupor theCompanyeitherdirectlyor indirectly.Consistentwith thepreviousfinancialyear,keymanagementpersonnelhasbeendefinedastheDirectors(executiveandnon-executive)oftheCompanyandheadsorseniormanagementofficerswhoaremembersoftheManagementCommitteefortheGroupandtheCompanyrespectively.

Wheneverexist,relatedpartytransactionsalsoincludetransactionswithentitiesthatarecontrolled,jointlycontrolledorsignificantlyinfluenceddirectlyorindirectlybyanykeymanagementpersonnelortheirclosefamilymembers.

335




41. SIGNIFICANT RELATED PARTY DISCLOSURES (CONTINUED)Inadditiontorelatedpartytransactionsandbalancesmentionedelsewhereinthefinancialstatements,setoutbelowarethesignificantrelatedpartytransactionsandbalances:

The Company

2012RM

2011RM

(a) Sales of goods and rendering of services to subsidiaries:–telecommunicationsrelatedservices 349.9 253.5–lease/rentalofbuildingsandvehicles 21.9 29.0–otherincome* 27.5 23.0

(b) Dividend and interest income from subsidiaries 127.1 112.8

(c) Purchases of goods and services from subsidiaries:–telecommunicationsrelatedservices 735.9 735.8–lease/rentalofbuildings 5.7 5.5–maintenanceofvehiclesandbuildings 48.6 48.7–otherexpenses 102.1 93.1

(d) Finance cost paid/payable to a subsidiary 75.6 74.3

* Includes management fees, royalties, charges for security and other shared services, training and relatedactivities.

336




41. SIGNIFICANT RELATED PARTY DISCLOSURES (CONTINUED)Inadditiontorelatedpartytransactionsandbalancesmentionedelsewhereinthefinancialstatements,setoutbelowarethesignificantrelatedpartytransactionsandbalances:(continued)


2012RM

2011RM

2012RM

2011RM

(e) Key management compensation@

–shorttermemployeebenefits–fees 2.2 1.3 1.9 1.1–salaries,allowancesandbonus 9.8 9.9 9.8 9.9–contributiontoEmployeesProvidentFund 1.2 1.3 1.2 1.3–otherstaffbenefits 0.2 0.4 0.2 0.4–estimatedmoneyvalueofbenefits 0.9 1.1 0.9 1.1

@ IncludestheDirectors’remuneration(whetherexecutiveorotherwise)asdisclosedinnote6(b)tothefinancialstatements.

Inaddition,certainkeymanagementpersonnelhavefamilymemberswhoareofficersofsubsidiariesoftheCompanywithtotalremunerationamountingtoRM0.4million(2011:RM0.4million).

The Company

31.12.2012RM

31.12.2011RM

1.1.2011RM

(f) Year end balances arising from: (i) Sales/Purchases of goods/services

–receivablesfromsubsidiaries 169.7 186.4 374.3–payablestosubsidiaries 305.2 397.1 419.0

(ii) Other payables–subsidiaries 191.6 264.5 201.2

The above receivables from/payables to related parties arise mainly from sale/purchase transactions with credittermsof30to90days.Thereceivables/payablesareunsecuredandinterestfree.

OtherpayablestosubsidiariesmainlycompriseexcessfundsofsubsidiariesmanagedandinvestedbytheCompanyunderthefundoptimisationarrangement.Thisamountisrepayableondemandandtheinterestpaidtosubsidiariesduringthefinancialyearrangesfrom3.18%to3.26%(31December2011:3.02%to3.36%;1January2011:2.25%to3.11%).

337




41. SIGNIFICANT RELATED PARTY DISCLOSURES (CONTINUED)

The Company

2012RM

2011RM

(g) Loans and advances to subsidiariesAt1January 219.7 236.7Cashadvanced 112.7 –Repayments(note38) (72.0) (17.0)Interestcharged(note7) 10.8 11.4Reclassifiedasotherreceivables (10.8) (11.4)

At 31 December (note 25) 260.4 219.7

42. CAPITAL AND OTHER COMMITMENTS


2012RM

2011RM

2012RM

2011RM

(a) Property, plant and equipment (sub-note (i))Commitmentsinrespectofexpenditureapprovedand

contractedfor 3,156.7 2,770.8 3,084.2 2,701.0Commitmentsinrespectofexpenditureapprovedbutnot

contractedfor 1,570.3 4,570.2 1,509.7 4,507.2

(i) IncludesexpenditureinrelationtoHighSpeedBroadbandproject.

(b) High Speed Broadband (HSBB) Project

On 25 July 2008, the Company received the Letter of Award from the Government of Malaysia (GoM) for theimplementationoftheHSBBprojectunderapublic-privatepartnership(PPP)arrangement.ThePPPagreementwasexecutedbytheGoMandtheCompanyon16September2008.

The objective of the HSBB project is to develop the country’s broadband infrastructure to increase broadbandpenetration and the competitiveness of the country in attracting foreign investments. The project involves thedeploymentofaccess,domesticcoreandinternationalnetworkstodeliveranend-to-endHSBBinfrastructure.Theestimatedroll-outcost,tobeincurredovera10yearsperiod(upto25July2018)isprojectedtobeRM11.3billion.AsaCo-Sponsoroftheproject,theGoMhasagreedtofundRM2.4billionoftheprojectcost.TheremainingRM8.9billionwillbebornebytheCompany.TheHSBBrollouthascovered1.3millionpremisesin2012.

338




42. CAPITAL AND OTHER COMMITMENTS (CONTINUED)(b) High Speed Broadband (HSBB) Project (continued)

Undertheabovearrangement,theCompanyshallclaimfromtheGoMfiftypercent(50.0%)ofthecapitalexpenditureincurredfortheHSBBprojectonaquarterlybasisoveraprojected3.5yearsperioduptothemaximumamountofRM2.4billion.

Inconjunctionwiththearrangement,theCompanyhastofulfillcertainundertakingsfortheGoMincludingsharingofappropriateportionofanyexcessoftheactualrevenueandothercostsavingsincurredinrelationtotheproject.

Otherundertakingsincludesroll-outoftheHSBBnetworkoutsidethecoverageareafortheGoM,developcertainnumber of telecentres, formulate a broadband package with low cost internet access and provide promotion andpublicawarenessonHSBBwhichwouldcontributetowardsachievingtheobjectiveoftheproject.


2012RM

2011RM

(c) Donation to Yayasan Telekom MalaysiaAmountapprovedandcommitted 31.0 30.2


2012RM

2011RM

(d) Future minimum lease payments of non-cancellable operating lease commitments Notlaterthanoneyear 75.2 65.4Laterthanoneyearandnotlaterthanfiveyears 300.8 300.8Laterthanfiveyears 432.4 507.6

808.4 873.8

Theaboveleasepaymentsrelatetothenon-cancellableoperatingleaseoffourofficebuildingsfromMenaraABSBerhad.

339




43. SEGMENT REPORTING By Business SegmentsTheGrouporganisesitsbusinessintothefollowingsegments,summarisedasfollows:

• Retail Business comprises the Company’s retail arm and its subsidiaries which complement the retail business.Retail Business is further segregated into four specific segments, i.e. Consumer, Small and Medium Enterprise(SME),EnterpriseandGovernmenttofocusondifferentmarketsegmentsandcustomers’needs.Thislineofbusinessis responsible for theprovisionofawiderangeof telecommunicationsservicesandcommunicationssolutions tosmallandmediumbusinessesaswellascorporateandgovernmentcustomersexceptforconsumerbusiness,whichprovidesonlyvoiceandInternetandmultimediaservices.

• WholesaleBusinesscomprisesthewholesalearmoftheCompanyanditssubsidiariesthatcomplementthewholesalebusiness. This line of business is responsible for the provision of a wide range of telecommunications servicesdeliveredovertheGroup’snetworkstootherlicensednetworkoperatorsnamelyNetworkFacilitiesProviders(NFP),NetworkServiceProviders(NSP)andApplicationServiceProviders(ASP).

• Global Business is responsible for the provision of inbound and outbound services for a wide range oftelecommunicationsservicesincludingthefixednetworkoperationsoftheGroup’soverseassubsidiaries.

• SharedServices/Others includeallsharedservicesdivisions,allbusiness functionsdivisionssuchas informationtechnologyandnetwork,andsubsidiariesthatdonotfallundertheabovelinesofbusiness.

PrioryearcomparativeshavebeenrestatedinlinewithbusinessstructurerealignmentinthecurrentfinancialyearandthechangesarisingfromthetransitiontoMFRSandotherchangestocomparativesasdisclosedinnote50tothefinancialstatements.

Segmentprofitsrepresentsegmentoperatingrevenuelesssegmentexpenses.Unallocatedincome/othergainscomprisesotheroperatingincomesuchasdividendincomeandothergainssuchasgainondisposalofavailable-for-saleinvestmentswhich is not allocated to a particular business segment. Unallocated costs represent expenses incurred by corporatedivisions such as Group Human Capital, Group Finance, Company Secretary, Group Procurement and special purposeentitiesandforeignexchangedifferencesarisingfromtranslationofforeigncurrencyplacementswhicharenotallocatedtoaparticularbusinesssegment.TheaccountingpoliciesusedtoderivereportablesegmentprofitsareconsistentwiththoseasdescribedintheSignificantAccountingPolicies.

Segment assets disclosed for each segment represent assets directly managed by each segment, primarily includeintangibles,property,plantandequipment,receivablesandinventories.Unallocatedassetsmainlyincludeavailable-for-saleinvestments,available-for-salereceivables,othernon-currentreceivables,financialassetsatfairvaluethroughprofitorloss,deferredtaxassetsaswellascashandbankbalancesoftheCompanyandproperty,plantandequipmentoftheCompany’scorporatedivisionsandofficebuildings.

Segment liabilitiescompriseoperating liabilitiesandexcludeborrowings, interestpayableonborrowings, taxationandzakatliabilities,deferredtaxliabilitiesanddividendpayable.

Segmentcapitalexpenditurecomprisesadditionstoproperty,plantandequipmentandintangibles, includingadditionsresultingfromacquisitionofsubsidiaries.

Significantnon-cashexpensescomprisemainlyallowanceforimpairmentofreceivablesandunrealisedforeignexchangegainsorlossesonsettlementasdisclosedinnote6(b)tothefinancialstatements.

340




43. SEGMENT REPORTING (CONTINUED)

Retail BusinessTotal Retail

BusinessRM

WholesaleBusiness

RM

GlobalBusiness

RM

Shared Services/

OthersRM

TotalRM

ConsumerRM

SMERM

EnterpriseRM

GovernmentRM

Financial year ended 31 December 2012

Operating revenueTotaloperatingrevenue 2,724.0 1,912.2 1,100.0 1,754.7 7,490.9 1,065.8 1,146.4 5,794.4 15,497.5Inter-segment@ (31.7) (1.7) (3.7) (0.1) (37.2) (291.5) (271.3) (4,904.0) (5,504.0)

Externaloperatingrevenue 2,692.3 1,910.5 1,096.3 1,754.6 7,453.7 774.3 875.1 890.4 9,993.5

ResultsSegmentprofits 22.6 298.9 241.7 509.6 1,072.8 132.7 127.7 73.2 1,406.4Unallocatedincome/othergains 47.7Unallocatedcosts (266.9)

Operatingprofitbeforefinancecost 1,187.2Financeincome 139.6Financecost (331.5)Foreignexchangegainon

borrowings 73.4Associates–shareofresults(netoftax) 0.9Profitbeforetaxationandzakat 1,069.6Taxationandzakat 236.3

Profitforthefinancialyear 1,305.9

At 31 December 2012Segmentassets 461.7 224.5 88.9 894.7 1,669.8 607.9 465.1 15,276.7 18,019.5Associates 1.5Unallocatedassets 4,174.9

Total assets 22,195.9

Segmentliabilities 338.5 395.7 121.6 538.9 1,394.7 262.3 313.9 4,586.9 6,557.8Borrowings 7,140.4Unallocatedliabilities 1,437.7

Total liabilities 15,135.9


Other informationCapitalexpenditure–additions

duringthefinancialyear 0.1 0.3 0.6 197.1 198.1 70.2 61.5 2,252.5 2,582.3Depreciationandamortisation 2.0 0.3 4.6 92.7 99.6 46.4 8.7 1,861.3 2,016.0Writeoffofproperty,plantand

equipment 0.1 # # 0.1 0.2 0.5 # 27.7 28.4Impairmentofproperty,plantand

equipment – – – – – – – 0.3 0.3Significantnon-cashexpenses 79.7 52.6 (13.1) (0.6) 118.6 (5.5) 16.6 (19.4) 110.3

341




43. SEGMENT REPORTING (CONTINUED)

Retail BusinessTotal Retail

BusinessRM

WholesaleBusiness

RM

GlobalBusiness

RM

Shared Services/

OthersRM

TotalRM

ConsumerRM

SMERM

EnterpriseRM

GovernmentRM


Operating revenueTotaloperatingrevenue 2,487.8 1,840.6 1,088.0 1,433.9 6,850.3 1,067.5 1,079.0 5,320.0 14,316.8Inter-segment@ (28.7) (2.5) (1.3) (0.5) (33.0) (297.5) (233.7) (4,601.9) (5,166.1)

Externaloperatingrevenue 2,459.1 1,838.1 1,086.7 1,433.4 6,817.3 770.0 845.3 718.1 9,150.7

ResultsSegmentprofits/(losses) 31.5 303.9 205.9 347.8 889.1 151.4 167.2 (22.9) 1,184.8Unallocatedincome/othergains 307.8Unallocatedcosts (247.7)Operatingprofitbeforefinancecost 1,244.9Financeincome 133.0Financecost (318.2)Foreignexchangelosson

borrowings (58.6)Associates–shareofresults(netoftax) 0.1

Profitbeforetaxationandzakat 1,001.2

Taxationandzakat 235.9

Profitforthefinancialyear 1,237.1

At 31 December 2011Segmentassets 518.8 236.4 142.7 922.1 1,820.0 570.7 437.4 14,807.2 17,635.3Associates 0.6Unallocatedassets 4,616.4

Totalassets 22,252.3

Segmentliabilities 371.0 342.7 133.7 533.0 1,380.4 219.0 273.4 4,664.0 6,536.8Borrowings 6,410.4Unallocatedliabilities 1,718.2

Totalliabilities 14,665.4


Other informationCapitalexpenditure-additions

duringthefinancialyear 0.2 0.3 12.3 71.0 83.8 62.6 30.1 2,469.4 2,645.9Depreciationandamortisation 2.4 0.2 4.2 89.7 96.5 46.5 7.4 1,880.0 2,030.4Writeoffofproperty,plantand

equipment 0.2 # # 2.5 2.7 0.6 0.2 93.9 97.4Impairmentofproperty,plantand

equipment – – – – – 0.1 – 0.1 0.2Significantnon-cashexpenses 42.3 35.2 (3.5) 6.6 80.6 3.8 (0.9) (7.1) 76.4

342




43. SEGMENT REPORTING (CONTINUED)@ Inter-segment operating revenue relates to inter-division recharge and inter-company revenue and has been

eliminatedattherespectivesegmentoperatingrevenue.Theinter-divisionrechargewasagreedbetweentherelevantlinesofbusiness.Theseinter-segmenttradingarrangementsareenteredintointhenormalcourseofbusinessandaresubjecttoperiodicreview.


By Geographical Location

TheGroupoperatesinafewcountriesasdisclosedinnote51tothefinancialstatements.Accordingly,thesegmentisationof theGroup’soperationsbygeographical location issegmentised intoMalaysiaandoverseas.Theoverseasoperationisnotfurthersegregatedasnoindividualoverseascountrycontributedmorethan10.0%oftheconsolidatedoperatingrevenueorassets.

InpresentinginformationforgeographicalsegmentsoftheGroup,salesarebasedonthecountryinwhichthecustomersarelocated.Totalassetsandcapitalexpenditurearedeterminedbasedonwheretheassetsarelocated.

Operating Revenue Total Assets Capital Expenditure

2012RM

2011RM

2012RM

2011RM

2012RM

2011RM

Malaysia 9,118.4 8,305.4 17,315.9 17,079.5 2,329.6 2,380.0Othercountries 875.1 845.3 705.1 556.4 252.7 265.9Unallocatedassets – – 4,174.9 4,616.4 – –

9,993.5 9,150.7 22,195.9 22,252.3 2,582.3 2,645.9

343




44. FINANCIAL INSTRUMENTS BY CATEGORY

The Group

Loans and receivables

RM

At fair valuethrough profit

or lossRM

Derivatives accounted for under hedge

accountingRM

Available-for-sale

RM

Other financialliabilities at

amortisedcostRM

TotalRM

31.12.2012Assets as per Statement of Financial PositionDerivativefinancialinstruments(note18) – 0.3 45.4 – – 45.7Available-for-saleinvestments(note27) – – – 599.3 – 599.3Available-for-salereceivables(note28(a)) – – – 7.6 – 7.6Staffloansandothernon-currentreceivables(excludingtaxrecoverable

andprepaidemployeebenefits)(note28(b)) 142.0 – – – – 142.0Tradeandotherreceivables(excludingprepayments,taxrecoverable

andstaffloans)(note32) 1,943.1 – – – – 1,943.1Financialassetsatfairvaluethroughprofitorloss(note33) – 16.5 – – – 16.5Cashandbankbalances(note34) 3,738.7 – – – – 3,738.7

Total 5,823.8 16.8 45.4 606.9 – 6,492.9

Liabilities as per Statement of Financial PositionBorrowings(excludingfinanceleaseliabilities)(note16) – – – – 7,085.9 7,085.9Financeleaseliabilities(note16) – – – – 54.5 54.5Derivativefinancialinstruments(note18) – 25.6 25.9 – – 51.5Tradeandotherpayables(excludingstatutoryliabilitiesanddeferred

revenue)(note35) – – – – 3,090.5 3,090.5Customerdeposits(note36) – – – – 518.2 518.2

Total – 25.6 25.9 – 10,749.1 10,800.6

344




44. FINANCIAL INSTRUMENTS BY CATEGORY (CONTINUED)

The Group


RM


or lossRM


accountingRM

Available-for-sale

RM


amortisedcostRM

TotalRM

31.12.2011Assets as per Statement of Financial PositionDerivativefinancialinstruments(note18) – – 66.2 – – 66.2Available-for-saleinvestments(note27) – – – 522.9 – 522.9Available-for-salereceivables(note28(a)) – – – 11.1 – 11.1Staffloansandothernon-currentreceivables(excludingtaxrecoverable


andstaffloans)(note32) 2,097.0 – – – – 2,097.0Financialassetsatfairvaluethroughprofitorloss(note33) – 20.1 – – – 20.1Cashandbankbalances(note34) 4,213.0 – – – – 4,213.0

Total 6,398.2 20.1 66.2 534.0 – 7,018.5

Liabilities as per Statement of Financial PositionBorrowings(excludingfinanceleaseliabilities)(note16) – – – – 6,352.2 6,352.2Financeleaseliabilities(note16) – – – – 58.2 58.2Derivativefinancialinstruments(note18) – 18.9 – – – 18.9Tradeandotherpayables(excludingstatutoryliabilitiesanddeferred

revenue)(note35) – – – – 3,032.4 3,032.4Customerdeposits(note36) – – – – 544.5 544.5

Total – 18.9 – – 9,987.3 10,006.2

1.1.2011Assets as per Statement of Financial PositionDerivativefinancialinstruments(note18) – – 3.6 – – 3.6Available-for-saleinvestments(note27) – – – 952.7 – 952.7Available-for-salereceivables(note28(a)) – – – 14.9 – 14.9Staffloansandothernon-currentreceivables(excludingtaxrecoverable


andstaffloans)(note32) 2,373.2 – – – – 2,373.2Financialassetsatfairvaluethroughprofitorloss(note33) – 21.5 – – – 21.5Cashandbankbalances(note34) 3,488.5 – – – – 3,488.5Total 5,952.3 21.5 3.6 967.6 – 6,945.0

Liabilities as per Statement of Financial PositionBorrowings(excludingfinanceleaseliabilities)(note16) – – – – 5,470.4 5,470.4Financeleaseliabilities(note16) – – – – 61.6 61.6Derivativefinancialinstruments(note18) – 22.8 5.2 – – 28.0Tradeandotherpayables(excludingstatutoryliabilitiesanddeferred

revenue)(note35) – – – – 3,107.1 3,107.1Customerdeposits(note36) – – – – 580.5 580.5Total – 22.8 5.2 – 9,219.6 9,247.6

345





The Company


RM


or lossRM


accountingRM

Available-for-sale

RM


amortisedcostRM

TotalRM

31.12.2012Assets as per Statement of Financial PositionDerivativefinancialinstruments(note18) – 0.3 45.4 – – 45.7Loansandadvancestosubsidiaries(note25) 260.4 – – – – 260.4Available-for-saleinvestments(note27) – – – 599.2 – 599.2Available-for-salereceivables(note28(a)) – – – 7.6 – 7.6Staffloansandothernon-currentreceivables(excludingtaxrecoverable



Liabilities as per Statement of Financial PositionBorrowings(excludingfinanceleaseliabilities)(note16) – – – – 5,385.8 5,385.8Financeleaseliabilities(note16) – – – – 54.5 54.5Derivativefinancialinstruments(note18) – 25.6 25.9 – – 51.5Payabletoasubsidiary(note17) – – – – 1,697.1 1,697.1Tradeandotherpayables(excludingstatutoryliabilitiesanddeferred


346





The Company


RM


or lossRM


accountingRM

Available-for-sale

RM


amortisedcostRM

TotalRM

31.12.2011Assets as per Statement of Financial PositionDerivativefinancialinstruments(note18) – – 66.2 – – 66.2Loansandadvancestosubsidiaries(note25) 219.7 – – – – 219.7Available-for-saleinvestments(note27) – – – 522.8 – 522.8Available-for-salereceivables(note28(a)) – – – 11.1 – 11.1Staffloansandothernon-currentreceivables(excludingtaxrecoverable



Liabilities as per Statement of Financial PositionBorrowings(excludingfinanceleaseliabilities)(note16) – – – – 4,875.0 4,875.0Financeleaseliabilities(note16) – – – – 58.2 58.2Derivativefinancialinstruments(note18) – 18.9 – – – 18.9Payabletoasubsidiary(note17) – – – – 1,474.2 1,474.2Tradeandotherpayables(excludingstatutoryliabilitiesanddeferred

revenue)(note35) – – – – 3,268.7 3,268.7Customerdeposits(note36) – – – – 543.8 543.8Total – 18.9 – – 10,219.9 10,238.8

1.1.2011Assets as per Statement of Financial PositionDerivativefinancialinstruments(note18) – – 3.6 – – 3.6Loansandadvancestosubsidiaries(note25) 236.7 – – – – 236.7Available-for-saleinvestments(note27) – – – 470.8 – 470.8Available-for-salereceivables(note28(a)) – – – 14.9 – 14.9Staffloansandothernon-currentreceivables(excludingtaxrecoverable



Liabilities as per Statement of Financial PositionBorrowings(excludingfinanceleaseliabilities)(note16) – – – – 4,012.0 4,012.0Financeleaseliabilities(note16) – – – – 61.6 61.6Derivativefinancialinstruments(note18) – 22.8 5.2 – – 28.0Payabletoasubsidiary(note17) – – – – 1,434.0 1,434.0Tradeandotherpayables(excludingstatutoryliabilitiesanddeferred


347




45. FAIR VALUESThefairvalueofafinancialinstrumentisassumedtobetheamountatwhichtheinstrumentcouldbeexchangedorsettledbetweenknowledgeableandwillingpartiesinanarm’slengthtransaction,otherthaninforcedorliquidationsale.

(a) Financial Instruments Carried at Fair Value

The table below analyses financial instruments carried at fair value, by valuation method. The different levels ofvaluationsare:

• Quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities(Level1).• InputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheassetorliability,eitherdirectly

(thatis,asprices)orindirectly(thatis,derivedfromprices)(Level2).• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)

(Level3).

ThefollowingtablepresentstheGroup’sandtheCompany’sfinancialassetsandliabilitiesthataremeasuredatfairvalueat31December:

31.12.2012 31.12.2011 1.1.2011

The GroupLevel 1

RMLevel 2

RMLevel 3

RMTotal

RMLevel 1

RMLevel 2

RMLevel 3

RMTotal

RMLevel 1

RMLevel 2

RMLevel 3

RMTotal

RM

AssetsFinancialassetsatfair

valuethroughprofitorloss

–quotedsecurities 16.5 – – 16.5 20.1 – – 20.1 21.5 – – 21.5Derivativesatfairvalue

throughprofitorloss – 0.3 – 0.3 – – – – – – – –Derivativesaccounted

forunderhedgeaccounting – 45.4 – 45.4 – 66.2 – 66.2 – 3.6 – 3.6

Available-for-salefinancialassets

–investments – 550.0 49.3 599.3 # 465.8 57.1 522.9 481.9 420.4 50.4 952.7–receivables – 7.6 – 7.6 – 11.1 – 11.1 – 14.9 – 14.9

Total 16.5 603.3 49.3 669.1 20.1 543.1 57.1 620.3 503.4 438.9 50.4 992.7

LiabilitiesDerivativesatfairvalue

throughprofitorloss – 25.6 – 25.6 – 18.9 – 18.9 – 22.8 – 22.8Derivativesaccounted

forunderhedgeaccounting – 25.9 – 25.9 – – – – – 5.2 – 5.2

Total – 51.5 – 51.5 – 18.9 – 18.9 – 28.0 – 28.0


348




45. FAIR VALUES (CONTINUED)(a) Financial Instruments Carried at Fair Value (continued)

31.12.2012 31.12.2011 1.1.2011

The CompanyLevel 1

RMLevel 2

RMLevel 3

RMTotal

RMLevel 1

RMLevel 2

RMLevel 3

RMTotal

RMLevel 1

RMLevel 2

RMLevel 3

RMTotal

RM

AssetsFinancialassetsatfairvalue

throughprofitorloss–quotedsecurities 16.5 – – 16.5 20.1 – – 20.1 21.5 – – 21.5Derivativesatfairvaluethrough

profitorloss – 0.3 – 0.3 – – – – – – – –Derivativesaccountedforunder

hedgeaccounting – 45.4 – 45.4 – 66.2 – 66.2 – 3.6 – 3.6Available-for-salefinancial

assets–investments – 549.9 49.3 599.2 – 465.7 57.1 522.8 – 420.4 50.4 470.8–receivables – 7.6 – 7.6 – 11.1 – 11.1 – 14.9 – 14.9

Total 16.5 603.2 49.3 669.0 20.1 543.0 57.1 620.2 21.5 438.9 50.4 510.8

LiabilitiesDerivativesatfairvaluethrough

profitorloss – 25.6 – 25.6 – 18.9 – 18.9 – 22.8 – 22.8Derivativesaccountedforunder

hedgeaccounting – 25.9 – 25.9 – – – – – 5.2 – 5.2

Total – 51.5 – 51.5 – 18.9 – 18.9 – 28.0 – 28.0

Thefairvalueoffinancialinstrumentstradedinactivemarketsisbasedonquotedmarketpricesatthereportingdate.Amarketisregardedasactiveifquotedpricesarereadilyandregularlyavailablefromanexchange,dealer,broker,industrygroup,pricingservice,orregulatoryagency,andthosepricesrepresentactualandregularlyoccuringmarkettransactionsonanarm’slengthbasis.ThequotedmarketpriceusedforfinancialassetsheldbytheGroupandtheCompanyisthecurrentbidprice.TheseinstrumentsareincludedinLevel1.InstrumentsincludedinLevel1compriseequitysecuritiesquotedontheBursaMalaysiaSecuritiesBerhadclassifiedasfairvaluethroughprofitorloss.

Thefairvalueoffinancialinstrumentsthatarenottradedinanactivemarket(forexampleover-the-counterderivatives)isdeterminedbyusingvaluation techniques.Thesevaluation techniquesmaximise theuseofobservablemarketdatawhereitisavailableandrelyaslittleaspossibleonentityspecificestimates.Ifallsignificantinputsrequiredtofairvalueaninstrumentareobservable,theinstrumentisincludedinLevel2.

Ifoneormoreofthesignificantinputsisnotbasedonobservablemarketdata,theinstrumentisincludedinLevel3.

349




45. FAIR VALUES (CONTINUED)(a) Financial Instruments Carried at Fair Value (continued)

Specificvaluationtechniquesusedtovaluefinancialinstrumentsinclude:

• Quotedmarketpricesordealerquotesforsimilarinstruments.• Thefairvalueofinterestrateswapsiscalculatedasthepresentvalueoftheestimatedfuturecashflowsbased

onobservableyieldcurves.• Thefairvalueofforwardforeignexchangecontractsisdeterminedusingforwardexchangeratesatthereporting

date,withtheresultingvaluediscountedbacktopresentvalue.• Other techniques,suchasdiscountedcashflowanalysis,areused todetermine fairvalue for theremaining

financialinstruments.

NotethatalloftheresultingfairvalueestimatesareincludedinLevel2exceptforaninvestmentinnon-tradedequitysecurity.

ThefollowingtableshowsareconciliationfromtheopeningbalancetotheclosingbalanceforfairvaluemeasurementsinLevel3ofthefairvaluehierarchy:


2012RM

2011RM

At1January 57.1 50.4Fairvaluechangestransferredtoothercomprehensiveincome (7.8) 6.7

At 31 December 49.3 57.1

Although the Group and the Company believe that estimates of fair value are appropriate, the use of differentmethodologiesorassumptionscould leadtodifferentmeasurementsof fairvalue.For fairvaluemeasurement inLevel3,ifthediscountrateusedinthediscountedcashflowanalysisistodifferby10%frommanagement’sestimates,thecarryingamountofavailable-for-salefinancialassetswouldbeapproximatelyRM1.6million(2011:RM2.7million)lowerorRM1.9million(2011:RM3.2million)higher.

350




45. FAIR VALUES (CONTINUED)(b) Financial Instruments Other Than Those Carried at Fair Value

The carrying amounts of the financial assets and liabilities of the Group and the Company at the reporting datereasonablyapproximatetheirfairvaluesexceptassetoutbelow:

The Group The Company31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011

Carryingamount

RM

Netfair value

RM

Carryingamount

RM

Netfair value

RM

Carryingamount

RM

Netfair value

RM

Carryingamount

RM

Netfair value

RM

Carryingamount

RM

Netfair value

RM

Carryingamount

RM

Netfair value

RMAssetsLoansandadvances

tosubsidiaries – – – – – – – – – – 236.7 204.5Staffloans 31.6 27.1 34.7 30.9 46.8 47.1 31.4 27.1 34.5 30.8 46.5 46.9Othernon-currentreceivables

(excludingtaxrecoverable) 110.4 100.9 53.5 53.0 – – 72.4 62.8 53.5 53.0 – –LiabilitiesBorrowings 7,140.4 7,784.9 6,410.4 7,089.6 5,532.0 6,075.4 5,440.3 5,976.0 4,933.2 5,509.7 4,073.6 4,515.3Payabletoasubsidiary – – – – – – 1,697.1 1,805.9 1,474.2 1,576.9 1,434.0 1,535.7

Assets

Inassessingthefairvalueofnon-tradedfinancialinstruments,theGroupandtheCompanyuseavarietyofmethodsandmakeassumptionsthatarebasedonmarketconditionsexistingateachreportingdate.Whereimpairmentismadeinrespectofanyinvestment,thecarryingamountnetofimpairmentmadeisdeemedtobeacloseapproximationofitsfairvalue.

Thecarryingamountofloansandadvancestosubsidiariesasat31December2012reasonablyapproximatetheirfairvaluesfollowingtherestructuringofaloanintofloatinginterestrateloanin2011.Priortotherestructuring,thefairvalueofloansandadvancestosubsidiarieswasestimatedbydiscountingtheestimatedfuturecashflowsusingtheprevailingmarketratesforsimilarcreditrisksandremainingperiodtomaturity.

Thefairvaluesofstaffloansandothernon-currentreceivableswereestimatedbydiscountingtheestimatedfuturecashflowsusingtheprevailingmarketratesforsimilarcreditrisksandremainingperiodtomaturity,respectively.

CollateralsaretakenforstaffloansandtheDirectorsareoftheopinionthatthepotentiallossesintheeventofdefaultwillbecoveredbythecollateralvaluesonindividualloanbasis.

Liabilities

Thefairvalueofquotedbondswasestimatedusingtherespectivequotedofferprice.Forunquotedborrowingswithfixedinterestrate,thefairvalueswereestimatedbydiscountingtheestimatedfuturecashflowsusingtheprevailingmarketratesforsimilarcreditrisksandremainingperiodtomaturity.

351




45. FAIR VALUES (CONTINUED)(b) Financial Instruments Other Than Those Carried at Fair Value (continued)

ThefinancialliabilitieswillberealisedattheircarryingamountsandnotattheirfairvaluesastheDirectorshavenointentiontosettletheseliabilitiesotherthaninaccordancewiththeircontractualobligations.

For all other short term financial instruments maturing within 1 year or are repayable on demand, the carryingamountsreasonablyapproximatetheirfairvaluesatthereportingdate.

46. LIqUIDITY RISKThefollowingtableanalysesthematurityprofileoftheGroup’sandtheCompany’sfinancialliabilities(includingderivativefinancialliabilities)basedoncontractualundiscountedcashflows:

The Group

Less than 1 year

RM

>1 year to 2 years

RM

>2 years to 5 years

RM>5 years

RM

Totalcontractual

undiscountedcash flow

RM

Difference from

carrying amount

RM

Carrying amount as

per Statement

of Financial Position

RM

31.12.2012Borrowings (2,015.4) (1,481.6) (447.7) (3,226.5) (7,171.2) 30.8 (7,140.4)Unfavourableforwardcontracts – (26.9) – – (26.9) 1.3 (25.6)Unfavourablecrosscurrencyinterestrateswaps (8.2) (8.2) (10.3) – (26.7) 0.8 (25.9)Tradeandotherpayables(excludingstatutoryliabilities

anddeferredrevenue) (3,090.5) – – – (3,090.5) – (3,090.5)Customerdeposits (518.2) – – – (518.2) – (518.2)

Total (5,632.3) (1,516.7) (458.0) (3,226.5) (10,833.5) 32.9 (10,800.6)

Interest (371.7) (228.7) (516.3) (821.4) (1,938.1)

31.12.2011Borrowings (19.1) (2,016.2) (1,648.9) (2,765.2) (6,449.4) 39.0 (6,410.4)Unfavourableforwardcontracts – – (19.8) – (19.8) 0.9 (18.9)Tradeandotherpayables(excludingstatutoryliabilities


Total (3,596.0) (2,016.2) (1,668.7) (2,765.2) (10,046.1) 39.9 (10,006.2)

Interest (354.0) (353.5) (511.6) (968.8) (2,187.9)

1.1.2011Borrowings (26.2) (7.8) (3,543.0) (1,986.8) (5,563.8) 31.8 (5,532.0)Favourableinterestrateswaps 6.5 4.3 (3.9) (5.3) 1.6 2.0 3.6Unfavourableinterestrateswaps 4.1 (5.7) (4.1) – (5.7) 0.5 (5.2)Unfavourableforwardcontracts – – (24.7) – (24.7) 1.9 (22.8)Tradeandotherpayables(excludingstatutoryliabilities


Total (3,703.2) (9.2) (3,575.7) (1,992.1) (9,280.2) 36.2 (9,244.0)

Interest (316.4) (316.9) (600.7) (830.8) (2,064.8)

352




46. LIqUIDITY RISK (CONTINUED)ThefollowingtableanalysesthematurityprofileoftheGroup’sandtheCompany’sfinancialliabilities(includingderivativefinancialliabilities)basedoncontractualundiscountedcashflows:(continued)

The Company

Less than 1 year

RM

>1 year to 2 years

RM

>2 years to 5 years

RM>5 years

RM

Totalcontractual

undiscountedcash flow

RM

Difference from

carrying amount

RM

Carrying amount as

per Statement

of Financial Position

RM

31.12.2012Borrowings (2,012.4) (59.5) (172.7) (3,226.5) (5,471.1) 30.8 (5,440.3)Payabletoasubsidiary – (1,422.1) (275.0) – (1,697.1) – (1,697.1)Unfavourableforwardcontracts – (26.9) – – (26.9) 1.3 (25.6)Unfavourablecrosscurrencyinterestrateswaps (8.2) (8.2) (10.3) – (26.7) 0.8 (25.9)Tradeandotherpayables(excludingstatutoryliabilities


Total (5,678.4) (1,516.7) (458.0) (3,226.5) (10,879.6) 32.9 (10,846.7)

Interest (371.7) (228.7) (516.3) (821.4) (1,938.1)

31.12.2011Borrowings (16.1) (2,016.2) (174.7) (2,765.2) (4,972.2) 39.0 (4,933.2)Payabletoasubsidiary – – (1,474.2) – (1,474.2) – (1,474.2)Unfavourableforwardcontracts – – (19.8) – (19.8) 0.9 (18.9)Tradeandotherpayables(excludingstatutoryliabilities


Total (3,828.6) (2,016.2) (1,668.7) (2,765.2) (10,278.7) 39.9 (10,238.8)

Interest (354.0) (353.5) (511.6) (968.8) (2,187.9)

1.1.2011Borrowings (4.8) (4.8) (2,109.0) (1,986.8) (4,105.4) 31.8 (4,073.6)Payabletoasubsidiary – – (1,434.0) – (1,434.0) – (1,434.0)Favourableinterestrateswaps 6.5 4.3 (3.9) (5.3) 1.6 2.0 3.6Unfavourableinterestrateswaps 4.1 (5.7) (4.1) – (5.7) 0.5 (5.2)Unfavourableforwardcontracts – – (24.7) – (24.7) 1.9 (22.8)Tradeandotherpayables(excludingstatutoryliabilities


Total (3,859.4) (6.2) (3,575.7) (1,992.1) (9,433.4) 36.2 (9,397.2)

Interest (315.5) (316.8) (600.7) (830.8) (2,063.8)

353




47. INTEREST RATE RISK/MATURITY ANALYSISThetablebelowsummarisestheGroup’sandtheCompany’sexposuretointerestrateriskaftertakingintoaccounttheeffectsofinterestrateswaps.IncludedinthetablesaretheGroup’sandtheCompany’sfinancialassetsandliabilitiesattheircarryingamounts,categorisedbytheearlierofrepricingorcontractualmaturitydates.Assuchthespreadofbalancesbetweentheageingbracketsinthetablebelowmaynotnecessarilycoincidewiththoseshownintheliquidityriskscheduleinnote46ortherepaymentschedulesinnote16tothefinancialstatements.Sensitivitytointerestratesarisesfrommismatchesintherepricingdates,cashflowsandothercharacteristicsofassetsandtheircorrespondingliabilityfunding.

Maturing or repriced (whichever is earlier)

The Group WARF*

1 year orlessRM

>1–2years

RM

>2–3years

RM

>3–4years

RM

>4–5years

RM

More than5 years

RM

Totalinterest

sensitiveRM

Non-interest

sensitiveRM

TotalRM

31.12.2012Financial assetsDerivativefinancialinstruments – 45.7 – – – – – 45.7 – 45.7Available-for-saleinvestments–non-interestsensitive – – – – – – – – 98.7 98.7–fixedinterestrate 4.76% 500.6 – – – – – 500.6 – 500.6Available-for-salereceivables 7.78% 1.0 0.7 0.9 1.0 0.9 3.1 7.6 – 7.6Staffloansandothernon-current

receivables(excludingtaxrecoverableandprepaidemployeebenefits)

–fixedinterestrate–conventional 3.93% 25.9 0.4 0.5 0.3 0.1 0.3 27.5 38.0 65.5–balancesunderIslamicprinciples 4.35% 47.3 1.2 1.6 2.1 2.3 22.0 76.5 – 76.5

Tradeandotherreceivables(excludingprepayments,taxrecoverableandstaffloans) – – – – – – – – 1,943.1 1,943.1

Financialassetsatfairvaluethroughprofitorloss – – – – – – – – 16.5 16.5

Cashandbankbalances–non-interestsensitive – – – – – – – – 476.3 476.3–fixedinterestrate

–conventional 3.63% 567.1 – – – – – 567.1 – 567.1–balancesunderIslamicprinciples 3.45% 2,695.3 – – – – – 2,695.3 – 2,695.3

Total 3,882.9 2.3 3.0 3.4 3.3 25.4 3,920.3 2,572.6 6,492.9

Financial liabilitiesBorrowings–non-interestsensitive – – – – – – – – 3.5 3.5–fixedinterestrate

–conventional 5.66% 3.1 1,467.9 43.8 42.1 315.0 971.4 2,843.3 – 2,843.3–balancesunderIslamicprinciples 5.10% 2,943.6 – – – – 1,350.0 4,293.6 – 4,293.6

Derivativefinancialinstruments – 51.5 – – – – – 51.5 – 51.5Tradeandotherpayables(excluding

statutoryliabilitiesanddeferredrevenue) – – – – – – – – 3,090.5 3,090.5

Customerdeposits – – – – – – – – 518.2 518.2Total 2,998.2 1,467.9 43.8 42.1 315.0 2,321.4 7,188.4 3,612.2 10,800.6Interest sensitivity gap 884.7 (1,465.6) (40.8) (38.7) (311.7) (2,296.0)

354




47. INTEREST RATE RISK/MATURITY ANALYSIS (CONTINUED)


The Group WARF*

1 year orlessRM

>1–2years

RM

>2–3years

RM

>3–4years

RM

>4–5years

RM

More than5 years

RM

Totalinterest

sensitiveRM

Non-interest

sensitiveRM

TotalRM



–fixedinterestrate–conventional 5.38% 8.6 0.6 0.6 0.8 0.3 0.4 11.3 – 11.3–balancesunderIslamicprinciples 4.63% 46.5 1.2 1.7 1.8 2.6 23.1 76.9 – 76.9




–conventional 3.42% 1,895.0 – – – – – 1,895.0 – 1,895.0–balancesunderIslamicprinciples 3.54% 1,682.1 – – – – – 1,682.1 – 1,682.1

Total 4,116.9 2.2 2.9 3.4 3.9 31.4 4,160.7 2,857.8 7,018.5


–conventional 6.17% 3.9 0.8 1,518.4 42.0 40.1 1,046.1 2,651.3 – 2,651.3–balancesunderIslamicprinciples 5.25% 30.4 2,925.0 – – – 800.0 3,755.4 – 3,755.4



Customerdeposits – – – – – – – – 544.5 544.5Total 53.2 2,925.8 1,518.4 42.0 40.1 1,846.1 6,425.6 3,580.6 10,006.2Interestsensitivitygap 4,063.7 (2,923.6) (1,515.5) (38.6) (36.2) (1,814.7)

355






The Group WARF*

1 year orlessRM

>1–2years

RM

>2–3years

RM

>3–4years

RM

>4–5years

RM

More than5 years

RM

Totalinterest

sensitiveRM

Non-interest

sensitiveRM

TotalRM








Total 3,456.2 3.3 3.4 6.6 5.3 41.8 3,516.6 3,428.4 6,945.0


–conventional 6.18% 22.5 3.8 0.1 1,477.8 40.6 1,059.9 2,604.7 – 2,604.7–balancesunderIslamicprinciples 5.57% (1.6) – 2,925.0 – – – 2,923.4 – 2,923.4



Customerdeposits – – – – – – – – 580.5 580.5Total 48.9 3.8 2,925.1 1,477.8 40.6 1,059.9 5,556.1 3,691.5 9,247.6Interestsensitivitygap 3,407.3 (0.5) (2,921.7) (1,471.2) (35.3) (1,018.1)

* WARF–WeightedAverageRateofFinanceasat31December

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47. INTEREST RATE RISK/MATURITY ANALYSIS (CONTINUED)Thetablebelowsummarisestheweightedaveragerateoffinance(WARF)asat31Decemberbymajorcurrenciesforeachclassoffinancialassetandliability:

31.12.2012 31.12.2011 1.1.2011

The Group USD RM USD RM USD RM

Financial assetsAvailable-for-saleinvestments – 4.76% – 4.66% – 4.60%Available-for-salereceivables – 7.78% – 7.79% – 7.52%Staffloansandothernon-current

receivables(excludingtaxrecoverableandprepaidemployeebenefits) – 4.24% – 4.73% – 4.50%

Cashandbankbalances 0.60% 3.53% 0.09% 3.00% – 2.90%

Financial liabilitiesBorrowings 6.28% 5.10% 6.28% 5.24% 6.28% 5.24%

357






The Company WARF*

1 year orlessRM

>1–2years

RM

>2–3years

RM

>3–4years

RM

>4–5years

RM

More than5 years

RM

Totalinterest

sensitiveRM

Non-interest

sensitiveRM

TotalRM

31.12.2012Financial assetsDerivativefinancialinstruments – 45.7 – – – – – 45.7 – 45.7Loansandadvancestosubsidiaries(net)–floatinginterestrate 3.80% 30.0 11.5 – 156.2 62.7 – 260.4 – 260.4Available-for-saleinvestments–non-interestsensitive – – – – – – – – 98.6 98.6–fixedinterestrate 4.76% 500.6 – – – – – 500.6 – 500.6Available-for-salereceivables 7.78% 1.0 0.7 0.9 1.0 0.9 3.1 7.6 – 7.6Staffloansandothernon-current






–conventional 3.83% 501.4 – – – – – 501.4 – 501.4–balancesunderIslamicprinciples 3.45% 2,532.6 – – – – – 2,532.6 – 2,532.6

Total 3,684.3 13.8 3.0 159.6 66.0 25.4 3,952.1 2,004.0 5,956.1

358






The Company WARF*

1 year orlessRM

>1–2years

RM

>2–3years

RM

>3–4years

RM

>4–5years

RM

More than5 years

RM

Totalinterest

sensitiveRM

Non-interest

sensitiveRM

TotalRM

31.12.2012Financial liabilitiesBorrowings–non-interestsensitive – – – – – – – – 3.5 3.5–fixedinterestrate

–conventional 6.17% 0.1 45.8 43.8 42.1 40.0 971.4 1,143.2 – 1,143.2–balancesunderIslamicprinciples 5.10% 2,943.6 – – – – 1,350.0 4,293.6 – 4,293.6

Payabletoasubsidiary–fixedinterestrate 4.55% – 1,422.1 – – 275.0 – 1,697.1 – 1,697.1Derivativefinancialinstruments – 51.5 – – – – – 51.5 – 51.5Tradeandotherpayables(excluding

statutoryliabilitiesanddeferredrevenue)

–non-interestsensitive – – – – – – – – 2,948.4 2,948.4–floatinginterestrate 3.26% 191.6 – – – – – 191.6 – 191.6Customerdeposits – – – – – – – – 517.8 517.8

Total 3,186.8 1,467.9 43.8 42.1 315.0 2,321.4 7,377.0 3,469.7 10,846.7

Interest sensitivity gap 497.5 (1,454.1) (40.8) 117.5 (249.0) (2,296.0)

359






The Company WARF*

1 year orlessRM

>1–2years

RM

>2–3years

RM

>3–4years

RM

>4–5years

RM

More than5 years

RM

Totalinterest

sensitiveRM

Non-interest

sensitiveRM

TotalRM

31.12.2011Financial assetsDerivativefinancialinstruments – 66.2 – – – – – 66.2 – 66.2Loansandadvancestosubsidiaries(net)–floatinginterestrate 4.44% – – 35.5 – 184.2 – 219.7 – 219.7Available-for-saleinvestments–non-interestsensitive – – – – – – – – 104.7 104.7–fixedinterestrate 4.66% 418.1 – – – – – 418.1 – 418.1Available-for-salereceivables 7.79% 0.4 0.4 0.6 0.8 1.0 7.9 11.1 – 11.1Staffloansandothernon-current







Total 3,912.8 2.2 38.4 3.4 188.1 31.4 4,176.3 2,488.1 6,664.4

360






The Company WARF*

1 year orlessRM

>1–2years

RM

>2–3years

RM

>3–4years

RM

>4–5years

RM

More than5 years

RM

Totalinterest

sensitiveRM

Non-interest

sensitiveRM

TotalRM


–conventional 7.34% 0.9 0.8 44.2 42.0 40.1 1,046.1 1,174.1 – 1,174.1–balancesunderIslamicprinciples 5.25% 30.4 2,925.0 – – – 800.0 3,755.4 – 3,755.4

Payabletoasubsidiary–fixedinterestrate 5.25% – – 1,474.2 – – – 1,474.2 – 1,474.2Derivativefinancialinstruments – 18.9 – – – – – 18.9 – 18.9Tradeandotherpayables(excluding



Total 314.7 2,925.8 1,518.4 42.0 40.1 1,846.1 6,687.1 3,551.7 10,238.8

Interestsensitivitygap 3,598.1 (2,923.6) (1,480.0) (38.6) 148.0 (1,814.7)

361






The Company WARF*

1 year orlessRM

>1–2years

RM

>2–3years

RM

>3–4years

RM

>4–5years

RM

More than5 years

RM

Totalinterest

sensitiveRM

Non-interest

sensitiveRM

TotalRM

1.1.2011Financial assetsDerivativefinancialinstruments – 3.6 – – – – – 3.6 – 3.6Loansandadvancestosubsidiaries(net)–floatinginterestrate 4.16% – – – 52.5 – – 52.5 – 52.5–fixedinterestrate 5.35% – – – – – 184.2 184.2 – 184.2Available-for-saleinvestments–non-interestsensitive – – – – – – – – 114.6 114.6–fixedinterestrate 4.60% 356.2 – – – – – 356.2 – 356.2Available-for-salereceivables 7.52% 0.1 0.3 0.5 0.9 1.4 11.7 14.9 – 14.9Staffloansandothernon-current







Total 3,281.7 3.3 3.4 59.1 5.3 226.0 3,578.8 2,582.8 6,161.6

362






The Company WARF*

1 year orlessRM

>1–2years

RM

>2–3years

RM

>3–4years

RM

>4–5years

RM

More than5 years

RM

Totalinterest

sensitiveRM

Non-interest

sensitiveRM

TotalRM


–conventional 7.34% 1.1 0.8 0.1 43.8 40.6 1,059.9 1,146.3 – 1,146.3–balancesunderIslamicprinciples 5.57% (1.6) – 2,925.0 – – – 2,923.4 – 2,923.4

Payabletoasubsidiary–fixedinterestrate 5.25% – – – 1,434.0 – – 1,434.0 – 1,434.0Derivativefinancialinstruments – 28.0 – – – – – 28.0 – 28.0Tradeandotherpayables(excluding



Total 228.7 0.8 2,925.1 1,477.8 40.6 1,059.9 5,732.9 3,667.9 9,400.8

Interestsensitivitygap 3,053.0 2.5 (2,921.7) (1,418.7) (35.3) (833.9)

* WARF–WeightedAverageRateofFinanceasat31December

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47. INTEREST RATE RISK/MATURITY ANALYSIS (CONTINUED)Thetablebelowsummarisestheweightedaveragerateoffinance(WARF)asat31Decemberbymajorcurrenciesforeachclassoffinancialassetandliability:

31.12.2012 31.12.2011 1.1.2011

The Company USD RM USD RM USD RM

Financial assetsLoansandadvancesto

subsidiaries(net) 2.72% 4.14% – 4.44% – 5.09%Available-for-saleinvestments – 4.76% – 4.66% – 4.60%Available-for-salereceivables – 7.78% – 7.79% – 7.52%Staffloansandothernon-current

receivables(excludingtaxrecoverableandprepaidemployeebenefits) – 4.24% – 4.73% – 4.50%

Cashandbankbalances 0.38% 3.55% – 3.21% – 3.05%

Financial liabilitiesBorrowings 7.88% 5.10% 7.88% 5.24% 7.88% 5.54%Payabletoasubsidiary 5.25% – 5.25% – 5.25% –Tradeandotherpayables

(excludingstatutoryliabilitiesanddeferredrevenue) – 0.20% – 0.27% – 0.19%

48. CONTINGENT LIABILITIES (UNSECURED) (a) On26November2007,theCompanyandTESBwereservedwithaWritofSummonsandStatementofClaiminrespect

ofasuitfiledbyMohdShuaibIshak(MSI).MSIisseekingfromtheCompany,TESBand12others(includingtheformerandexistingdirectorsoftheCompany)jointlyand/orseverally,interalia,thefollowing:

(i) aDeclarationthattheSaleandPurchaseAgreementdated28October2002betweenCelcomandtheCompany(orTESB)fortheacquisitionbyCelcomofthesharesinTMCellularSdnBhd,andallmattersundertakenthereunderincludingbutnotlimitedtotheissuanceofsharesbyCelcomareillegalandvoidandofnoeffect;

(ii) aDeclarationthatallpurchasesofsharesinCelcommadebyTESBand/ortheCompanyand/orpartiesactinginconcertwiththemwitheffectfromandincludingthedateoftheNoticeoftheMandatoryOfferdated3April2003issuedbyCommerceInternationalMerchantBankersBerhad(nowknownasCIMB)areillegalandvoidandofnoeffect;

(iii) allnecessaryandfitordersanddirectionsasmayberequiredtogiveeffecttotheaforesaidDeclarationsastheCourtdeemedfitincludingbutnotlimitedtodirectionsfortherescissionofalltransfersofsharesofCelcommadeaftertheNoticeofMandatoryOfferforsharesinCelcomdated3April2003;

(iv) thattheCompanybyitself,itsservantsandagentsberestrainedfromgivingeffecttoorexecutinganyoftheproposalsrelatingtotheproposeddemergerofthemobileandfixedlinebusinessesoftheGroup;and

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48. CONTINGENT LIABILITIES (UNSECURED) (CONTINUED)(a) (v) variousdamagestobeassessed.

On30November2007,theCompanyandTESBobtainedleavetoenterconditionalappearanceandsubsequentlyon17December2007,theCompanyandTESBfiledtherelevantapplicationtostrikeoutthesuit(StrikingOutApplication).

On20July2012,theHighCourtfoundinfavouroftheCompanyandgrantedanorderintermsoftheStrikingOutApplication.

On13August2012,MSIfiledanappealtotheCourtofAppealagainstthedecisionoftheHighCourtabove.TheCourtofAppealhasfixed28February2013,asthehearingdatefortheappeal.

TheDirectors,basedonlegaladvice,areoftheviewthattheCompanyandTESBhaveagoodchanceofsuccessintheappeal.

(b) On11August2009,theCompanyanditswhollyownedsubsidiary,TMNetSdnBhd(TMNet)wereservedwithaWritofSummonsandStatementofClaimbyNetworkGuidance(M)SdnBhd(NGSB)inconnectionwithapurportedjointventureinregardtoaprojectdescribedinthestatementofclaimas“FineTVServices”.

On17September2009,theCompanyandTMNetfiledtheAmendedStatementofDefenceinCourt.

On13October2009,NGSBfiledandservedanAmendedStatementofClaimtoTMNetwhereinNGSBhavequantifiedtheirclaimforaggravateddamagesatRM200.0millionandexemplarydamagesatRM200.0million.Pursuantthereto,theCompanyandTMNetfiledare-amendedStatementofDefenceinCourton23October2009.

On10December2009,theCompanyandTMNetfiledanapplicationtostrikeoutNGSB’sclaim.On15July2010,theHighCourtproceededwiththehearingofthestrikingoutapplicationanddismissedthesamewithcoston9August2010.On3September2010,theCompanyandTMNetfiledanappealtotheCourtofAppealagainsttheabovestateddecisionoftheHighCourt.On11January2011,theCourtofAppealhasdismissedappeal.

Meanwhile, NGSB’s application to re-amend its Amended Statement of Claim was allowed by the High Court on12January2011.Pursuant thereto,on11February2011,NGSB’ssolicitorsservedon theCompanyandTMNet’ssolicitorsanAmendedWritandRe-amendedStatementofClaim(Re-amendedClaim).

ThereliefssoughtbyNGSBagainsttheCompanyandTMNetintheRe-amendedClaimareasfollows:

(a) adeclarationthat:

(i) NGSBandtheCompanyenteredintoanagreementwherebyitwasagreedthatNGSBandtheCompanywillcommencewiththeFineTVprojectonajointventurebasis(theAgreement);

(ii) theCompanybreachedtheAgreement;

(iii) asaresultofthebreachoftheAgreement,NGSBsufferedlossanddamages.

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48. CONTINGENT LIABILITIES (UNSECURED) (CONTINUED)(b) (b) anorderthattheCompanyandTMNetpayNGSBthefollowingspecialdamages:

(i) RM150,000fortheservicesofFiberailSdnBhd;

(ii) RM300,000fortheservicesof“MYLOCA”and/ortherentalspaceofTMNet;

(iii) RM1.0millionforthecostofthetestsconducted;

(iv) RM5.0millionforequipmentsuchastheserver,therouter,DigitalVideoEncoder,SetTopBoxandDigitalVideoEditing;

(v) RM3.0millionforlicensefeesfortheuseofsoftware;

(vi) RM3.0millionforlicensefeesfortheuseofcontent;

(vii) RM500,000forlegalfees;

(viii) RM4.0millionforoverheads;and

(ix) loanofRM7.0millionfromEurofineSdnBhd.

(c) interestattherateof8%perannumonthespecialdamagesfromthedateofjudgmenttothedateoffullandfinalsettlementofthespecialdamages;

(d) anorderthattheCompanyandTMNetpaygeneraldamages;

(e) anorderthatthegeneraldamagesbeassessedbythecourt;

(f) interestof8%perannumonthegeneraldamagesfromthedateofjudgmenttothedateoffullandfinalsettlementofthegeneraldamages;

(g) cost;and

(h) anyotherreliefwhichthecourtdeemsfit.

IntheRe-amendedClaim,NGSBhasalsoreflectedthechangeofNGSB’snametoFineTVNetworkSdnBhd.

Thecaseproceededfortrialon25,26and27January2012andthereafteron7and8May2012.On2July2012,theHighCourtdismissedNGSB’slegalsuitwithcost.

On1August2012,NGSBfiledanappealtotheCourtofAppealagainstthedecisionoftheHighCourtabove.TheCourtofAppealhasyettofixahearingdatefortheappeal.

TheDirectors,basedonlegaladvice,areoftheviewthattheCompanyhasagoodchanceofsuccessintheappeal.

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48. CONTINGENT LIABILITIES (UNSECURED) (CONTINUED)(c) On3January2011,theCompanywasservedwithaJudgmentinDefaultbyAINBTech(M)SdnBhd(AINB)dated2

December2010andbasedontheJudgment,AINBhasbeenawardedthefollowingreliefsbytheHighCourt:

(i) RM25.0 million being AINB’s expenses incurred for the purpose of a project known as “Supply, Delivery,Installation,Testing,CommissioningandSupportofOneNumberService”entered intobetweenbothparties(theProject);

(ii) generaldamagestobeassessedbytheCourt;

(iii) interestattherateof5%perannumcalculatedfromthedateoftheJudgmentuntilthedateofthefullsettlement;

(iv) legalcostsofRM225;and

(v) otherreliefasdeemedfitbytheCourt.

On14January2011,theCompanyfiledanapplicationinCourttosetasidetheJudgmentinDefaultanditwasfixedforhearingon21January2011.On21January2011,theCourtallowedtheCompany’sapplicationforastayofallexecutionproceedingsagainsttheCompanyinrespectoftheJudgmentinDefaultpendingthefinaldisposaloftheCompany’sapplicationtosetasidetheJudgmentinDefault.

On23February2011,theCourtallowedtheCompany’sapplicationtosetasidetheJudgmentinDefaultwithcost.Subsequentlyon30June2011,theentirelegalsuitwasdismissedwithcost.

On22March2012,AINB’sappealtotheCourtofAppealagainsttheHighCourt’sdecisionabovewasstruckout.

TheDirectors,basedonthelegaladvice,areoftheviewthatthelegalsuithasended.

(d) ThelegalsuitwascommencedbyOneVisaSdnBhd(OVSB)againsttheCompanyon21September2012.

Inbrief,thelegalsuitispremisedontheallegationthattheCompanyisatrespasseron5piecesoflandbelongingtoOVSBknownasHS(D)23474Lot3181,HS(D)23475Lot3182,HS(D)23477Lot3183,HS(D)23478Lot3184andHS(D)23479Lot3185ofPekanUluTemiang,NegeriSembilan(theLand)duetotheexistenceoftheCompany’snetworkinfrastructures thereon.OVSB furtheralleges that itwasprevented fromdeveloping theLand to its fullpotentialasaresultofthesupplyoftelecommunicationservicesbytheCompanytocertainillegaloccupiers(Squatters)ontheLand.

OVSBisclaimingthefollowingsumsfromtheCompany:

(i) damages amounting to RM23,077,116.00 which is the total rental value of the Land allegedly payable by theCompanytoOVSB,basedoncurrentprevailingmarketvalueratecalculatedwitheffectfrom22March2011andcontinuinguntilcessationofthetelecommunicationservicesandthedateofremovaloftheCompany’soffendinginfrastructurefromtheLand;

(ii) damagesamountingtoRM198,110,908.00whichOVSBallegesasbeingitslossofopportunityand/orlossofprofitbyreasonofthecontinuedwrongfuloccupationoftheSquattersontheLandwhichwascaused,encouragedorfacilitatedbytheCompanyinOVSBbeingpreventedfromdevelopingtheLandtoitsfullpotential;

(iii) quitrentandassessmentfortheLandfortheyear2012amountingtoRM234,677.00andRM49,360.00respectively;

and

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48. CONTINGENT LIABILITIES (UNSECURED) (CONTINUED)(d) (iv) generaldamages,aggravated/exemplarydamages,interestandcosts.

On 28 September 2012, the Company filed its Memorandum of Appearance in the High Court. The Statement ofDefencewaslaterfiledon22October2012.Thetrialdateisfixedon21to25October2013.

TheDirectors,basedonlegaladvice,areoftheviewthattheCompanyhasareasonablygoodarguabledefencetodismissthelegalsuit.

Apart from the above, the Directors are not aware of any other proceedings pending against the Company and/or itssubsidiariesorofanyfactslikelytogiverisetoanyproceedingswhichmightmateriallyaffectthepositionorbusinessoftheCompanyand/oritssubsidiaries.

Therewerenoothercontingentliabilitiesormaterial litigationsorguaranteesotherthanthosearisingintheordinarycourseofthebusinessoftheGroupandtheCompanyandonthese,nomateriallossesareanticipated.

49. SIGNIFICANT SUBSEqUENT EVENT Derivative financial instrument and hedging transactions

On3January2013, theCompanyentered intoa forwardforeigncurrencycontractwhichwillmatureon19September2014.Onthematuritydate,theCompanywouldreceiveUSD30.0millionfromthecounterpartyinreturnforapaymentofRM94.8million.

On11January2013,theCompanyenteredintoaforwardforeigncurrencycontractwhichwillmatureon19September2014.Onthematuritydate,theCompanywouldreceiveUSD40.0millionfromthecounterpartyinreturnforapaymentofRM125.6million.

TheobjectiveofthesecontractsistoeffectivelyconvertpartoftheUSD465.1million5.25%GuaranteedNotesoftheGroup,duein2014,intoanRMprincipalliability.

Savefortheabove,thereisnoothermaterialeventsubsequenttothereportingdatethatrequiresdisclosureoradjustmenttotheauditedfinancialstatements.

50. IMPACT OF TRANSITION TO MFRS AND CHANGES TO COMPARATIVES(a) Impact of transition to MFRS

Subsequenttothelastfinancialyearend,theGroupandtheCompanyhaveadoptedtheMalaysianFinancialReportingStandardFramework(MFRSFramework)issuedbytheMASBwitheffectfrom1January2012.TheadoptionofMFRSFrameworkenablesentitiestoassertthattheirfinancialstatementsareinfullcompliancewithInternationalFinancialReportingStandards(IFRS)becausetheMFRSFrameworkisafully-IFRS-compliantframeworkanditsstandardsareequivalenttoIFRS.

Asdisclosedinnote2tothefinancialstatements,thissetoffinancialstatementsoftheGroupandtheCompanyarethefirstsetoffinancialstatementspreparedinaccordancewithMFRSs,includingMFRS1“First-timeAdoptionofMFRS”.TheMFRSisgenerallyrequiredtobeappliedretrospectivelywithcertainmandatoryexceptionsandoptionalexemptionsprovidedbyMFRS1tofacilitateentitiestransitioningtoMFRS.ThemandatoryexceptionsandoptionalexemptionsappliedbytheGrouparesetoutbelow.

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50. IMPACT OF TRANSITION TO MFRS AND CHANGES TO COMPARATIVES (CONTINUED)(a) Impact of transition to MFRS (continued)

(i) MFRS1mandatoryexceptionstotheretrospectiveapplicationofotherMFRSsincludesthefollowing:

– MFRS estimates as at transition date are consistent with the estimates as at the same date made inconformitywiththepreviousFinancialReportingStandards(FRS).

– HedgeaccountingcanonlybeappliedprospectivelyfromthetransitiondatetoahedgingrelationshipthatqualifiesforhedgeaccountingunderMFRS139“FinancialInstruments:RecognitionandMeasurement”atthatdate.Hedgingrelationshipscannotbedesignatedretrospectively.

– ApplicationofthederecognitionrulesinMFRS139“FinancialInstruments:RecognitionandMeasurement”tofinancialassetsandliabilitiesthathavebeenderecognised,exceptundercertainconditions.

– Applicationofrequirementspertainingtotheattributionofearningsandlosstotheownersoftheparentand to the non-controlling interests even if this results in the non-controlling interests having a deficitbalance,accountingforchangesintheparent’sownershipinterestinasubsidiarycompanythatdoesnotresultinalossofcontrolandaccountingforlossofcontroloverasubsidiarycompany.

(ii) MFRS1optionalexemptions

1) Exemptionforbusinesscombinations

MFRS 1 provides the option to apply MFRS 3 “Business Combinations” prospectively for businesscombinationthatoccurredfromthetransitiondateorfromadesignateddatepriortothetransitiondate.This provides relief from full retrospective application that would require restatement of all businesscombinationspriortothetransitiondateoradesignateddatepriortothetransitiondate.TheGroupandtheCompanyelectedtoapplyMFRS3prospectivelytobusinesscombinationsthatoccurredafter1January2011.Businesscombinationsthatoccurredpriorto1January2011havenotbeenrestated.Goodwillarisingfromacquisitionsbefore1January2011hasbeencarriedforwardfromthepreviousFRSframeworkasat thedateof transition. Inaddition, theGrouphasalsoappliedMFRS127“ConsolidatedandSeparateFinancialStatements”fromthesamedate.

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(ii) MFRS1optionalexemptions(continued)

2) Exemptionforfairvalueasdeemedcostonproperty,plantandequipment

InaccordancewiththeexemptionsinMFRS1,theGroupandtheCompanyhaveelectedtomeasurefreeholdlandatfairvalueasattransitiondateastheirdeemedcostasatthatdate.TheaggregatefairvalueandadjustmentstothecarryingamountreportedunderFRSattransitiondateareasfollows:


Aggregatefair value

RM

Aggregate adjustments to

the carryingamount

reported under FRS

RM

Aggregatefair value

RM

Aggregate adjustments to

the carryingamount

reported under FRS

RM

Freeholdland–includedinproperty,plant

andequipment 725.5 508.7 255.3 203.3–includedininvestment

property – – 67.0 26.6

725.5 508.7 322.3 229.9

3) Designationofpreviouslyrecognisedfinancialinstruments

MFRS1permitsapreviouslyrecognisedfinancialinstrumenttobedesignatedasavailableforsaleorfairvaluethroughprofitorlossonthetransitiondateprovidedthecriteriainMFRS139“FinancialInstruments:RecognitionandMeasurement”aremet.TheGroupandtheCompanyelectednottodesignateapreviouslyrecognisedfinancialassetandliabilityasafinancialassetorfinancialliabilityasatfairvaluethroughprofitorlossordesignateafinancialassetasavailable-for-saleatitstransitiondate.

4) Share-basedpaymenttransactions

MFRS1providesretrospectiverelieffromapplyingMFRS2“Share-basedPayment”toequityinstrumentsgranted on or before 7 November 2002 and to equity instruments granted after 7 November 2002 andvestedbeforethetransitiondate.TheGroupandtheCompanyhaveappliedthisexemptiontonotapplytherequirementsinMFRS2toequityinstrumentsmentionedabove.

5) Borrowingcosts

TheGroupandtheCompanyhaveappliedtheexemptiontoapplyMFRS123“BorrowingCosts”prospectivelytoborrowingcostsrelatingtoqualifyingassetsforwhichthecommencementdateforcapitalisationisonorafterthedateoftransition.

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(ii) MFRS1optionalexemptions(continued)

6) Arrangementwithleases

Inaccordancewiththeexemptions inMFRS1, theGroupelectedtomakethedeterminationofwhetheran arrangement existing at the date of transition to MFRSs contains a lease on the basis of facts andcircumstancesexistingatthatdate.

7) Fairvaluemeasurementoffinancialassetsorfinancialliabilitiesatinitialrecognition

TheGrouphasappliedtheexemptiontoapplytherequirementspertainingtofairvaluemeasurementofno-activemarketfinancialinstrumentatinitialrecognitionprospectivelytotransactionsenteredintoonorafterthedateoftransition.

(iii) ImpactofFRS2012004“PropertyDevelopmentActivities”

FRS201isalocallydevelopedstandardwithnoequivalentstandardunderIFRSandthereforedoesnotformpart of the MFRS framework. With the removal of FRS 201, the Group has reclassified its entire land heldfor property development as at the transition date to inventories as these are properties which are held forplanneddevelopment.UndertheFRSframework,landheldforpropertydevelopmentwascarriedatcostlessaccumulatedimpairmentlosswhichiscomparabletonetrealisablevaluewhenclassifiedasinventoryunderMFRS.Assuch,thereisnofinancialimpacttotheincomestatementarisingfromthisreclassification.

(iv) ReconciliationofequityarisingupontransitiontoMFRS

MFRS1requiresanentitytoreconcileequity,totalcomprehensiveincomeandcashflowsforprioryears.ThefollowingtablerepresentsthereconciliationfromFRStoMFRSfortherespectiveyearsnotedforequity.


31.12.2011RM

1.1.2011RM

31.12.2011RM

1.1.2011RM

TotalequityaspreviouslyreportedunderFRS 7,131.7 7,860.2 6,280.6 6,936.9Addtransitioningadjustments:Fairvalueasdeemedcostforfreeholdland–includedinproperty,plantandequipment 508.7 508.7 203.3 203.3–includedininvestmentproperty – – 26.6 26.6

TotalequityupontransitiontoMFRS 7,640.4 8,368.9 6,510.5 7,166.8

ThetransitionfromFRStoMFRShashadnoeffectonthereportedtotalcomprehensiveincomeandcashflowsgeneratedbytheGroupandtheCompany.Thereconciliationofrelevant itemsintheStatementsofFinancialPositionisasshowninsub-note(c)below.

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50. IMPACT OF TRANSITION TO MFRS AND CHANGES TO COMPARATIVES (CONTINUED)(b) Changes to comparatives

(i) Otherreclassification

TheGroupandtheCompanyhavereclassifiedadvancerentalbillingsfromtradeandotherreceivablestocurrentliabilitiestobetterreflectthenatureandsubstanceofthetransactionandamountsreceivablefromcustomers.

(ii) Adjustmenttoprioryears

Rentalbillingsareraisedinadvance.TheGroupandtheCompanyrecogniseadvancerentalbillingsasrevenueonastraightlinebasisinaccordancewithcontractualterms.

RentalrevenuerecognitionrequiresanassessmentofservicestocustomersatthepointofbillingtoascertaintheportionofrevenueaccruingtotheGroupandtheCompanyandtheportionthatshouldbedeferredasadvancerental.Formonthlybillings,advancerentalsaredeferredonlytoberecognisedinthefollowingmonth.

Duringthecurrentfinancialyear,andinconjunctionwiththeimplementationofanewbillingsystem,theGroupandtheCompanyhadreviewedthebasisappliedincalculatingmonthlyadvancerental.Basedonthisreview,additional advance Streamyx customer billing revenue should be deferred. The impact of this adjustment isnotmaterialtotheIncomeStatementsforthefinancialyearended31December2012andthecorrespondingfinancialyearended31December2011.

Consequently,theGroupandtheCompanyhaveeffectedthischangeasanadjustmenttoretainedprofits.

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50. IMPACT OF TRANSITION TO MFRS AND CHANGES TO COMPARATIVES (CONTINUED)(c) Financial impacts

Thefollowingdisclosestheimpactsofsub-note(a)and(b)abovetotheStatementsofFinancialPositionoftheGroupandtheCompany:

Transition to MFRS (sub-note (a))

Changes to comparatives (sub-note (b))

The Group

As previously reported

under FRSRM

Adjustment to opening

balance (sub-note

(a)(ii))RM

Reclassifi-cation

(sub-note (a)(iii))

RM

As restated

under MFRSRM

Other reclassifi-

cation (sub-note

(b)(i))RM

Adjustment to prior

years (sub-note

(b)(ii))RM

As restatedRM

Statement of Financial Position

At 31 December 2011Retainedprofits 3,172.5 508.7 – 3,681.2 – (53.5) 3,627.7Deferredtaxliabilities 1,559.6 – – 1,559.6 – (17.8) 1,541.8

Non-current AssetsProperty,plantandequipment 13,613.0 508.7 – 14,121.7 – – 14,121.7Landheldforpropertydevelopment 108.4 – (108.4) – – – –

Current AssetsInventories 216.9 – 108.4 325.3 – – 325.3Tradeandotherreceivables 1,951.4 – – 1,951.4 371.8 – 2,323.2

Current LiabilitiesAdvancerentalbillings – – – – 371.8 71.3 443.1

At 1 January 2011Retainedprofits 2,719.4 508.7 – 3,228.1 – (53.5) 3,174.6Deferredtaxliabilities 1,664.2 – – 1,664.2 – (17.8) 1,646.4

Non-current AssetsProperty,plantandequipment 13,112.1 508.7 – 13,620.8 – – 13,620.8Landheldforpropertydevelopment 107.4 – (107.4) – – – –

Current AssetsInventories 174.0 – 107.4 281.4 – – 281.4Tradeandotherreceivables 2,329.3 – – 2,329.3 299.0 – 2,628.3

Current LiabilitiesAdvancerentalbillings – – – – 299.0 71.3 370.3

373




50. IMPACT OF TRANSITION TO MFRS AND CHANGES TO COMPARATIVES (CONTINUED)(c) Financial impacts (continued)

Thefollowingdisclosestheimpactsofsub-note(a)and(b)abovetotheStatementsofFinancialPositionoftheGroupandtheCompany:(continued)

Transition to MFRS

(sub-note (a))Changes to comparatives

(sub-note (b))

The Company

As previously reported

under FRSRM

Adjustment to opening

balance (sub-note

(a)(ii))RM

As restated

under MFRSRM

Other reclassifi-

cation (sub-note

(b)(i))RM

Adjustment to prior

years (sub-note

(b)(ii))RM

As restatedRM

Statement of Financial Position

At 31 December 2011Retainedprofits 2,484.0 229.9 2,713.9 – (53.5) 2,660.4Deferredtaxliabilities 1,456.6 – 1,456.6 – (17.8) 1,438.8

Non-current AssetsProperty,plantandequipment 12,272.3 203.3 12,475.6 – – 12,475.6Investmentproperty 94.7 26.6 121.3 – – 121.3

Current AssetsTradeandotherreceivables 1,803.0 – 1,803.0 356.0 – 2,159.0

Current LiabilitiesAdvancerentalbillings – – – 356.0 71.3 427.3

At 1 January 2011Retainedprofits 1,996.9 229.9 2,226.8 – (53.5) 2,173.3Deferredtaxliabilities 1,513.4 – 1,513.4 – (17.8) 1,495.6

Non-current AssetsProperty,plantandequipment 11,782.5 203.3 11,985.8 – – 11,985.8Investmentproperty 93.0 26.6 119.6 – – 119.6

Current AssetsTradeandotherreceivables 2,185.4 – 2,185.4 278.6 – 2,464.0

Current LiabilitiesAdvancerentalbillings – – – 278.6 71.3 349.9

374




51. LIST OF SUBSIDIARIES AS AT 31 DECEMBER 2012Thesubsidiariesareasfollows:

Group’s EffectiveInterest Paid-up Capital

Name of Company2012

%2011

%2012

Million2011

Million Principal Activities

FiberailSdnBhd 54 54 RM15.8 RM15.8 ProvisionofnetworkconnectivityandbandwidthservicesinMalaysiaandprojectmanagementservicesinrelationtotelecommunications

FibrecommNetwork(M)SdnBhd

51 51 RM75.0 RM75.0 Provisionoffibreoptictransmissionnetworkservices

GITNSdnBerhad 100 100 RM50.0 RM50.0 Provisionofmanagednetworkservicesandenhancedvalueaddedtelecommunicationandinformationtechnologyservices

HijrahPertamaBerhad 100 100 RM# RM# Specialpurposeentity

IntelsecSdnBhd 100 100 RM3.0 RM3.0 Ceasedoperations

MenaraKualaLumpurSdnBhd 100 100 RM10.0<< RM91.0 ManagementandoperationofMenaraKualaLumpur

MobikomSdnBhd 100 100 RM260.0 RM260.0 Provisionoftransmissionofvoiceanddatathroughthecellularsystem

ParksidePropertiesSdnBhd 100 100 RM0.1 RM0.1 Dormant

TekadMercuBerhad 100 100 RM# RM# Specialpurposeentity

TelekomAppliedBusinessSdnBhd

100 100 RM1.6 RM1.6 Provisionofsoftwaredevelopmentandsaleofsoftwareproducts

TelekomConsultancySdnBhd@ – 51 RM# RM# Dissolvedon20July2012

TelekomEnterpriseSdnBhd 100 100 RM0.6 RM0.6 Investmentholding

TelekomMalaysia(HongKong)Limited*

100 100 HKD18.5 HKD18.5 Provisionofinternationaltelecommunicationsservices

TelekomMalaysia(S)PteLtd* 100 100 SGD# SGD# Provisionofinternationaltelecommunicationsservices

TelekomMalaysia(UK)Limited* 100 100 GBP# GBP# Provisionofinternationaltelecommunicationsservices

TelekomMalaysia(USA)Inc* 100 100 USD3.5 USD3.5 Provisionofinternationaltelecommunicationsservices

TelekomMulti-MediaSdnBhd 100 100 RM1.7 RM1.7 Investmentholding

375





Name of Company2012

%2011

%2012

Million2011


TelekomResearch&DevelopmentSdnBhd

100 100 RM20.0 RM20.0 Provisionofresearchanddevelopmentactivitiesintheareasofcommunications,hi-techapplicationsandproductsandservicesinrelatedbusiness

TelekomSalesandServicesSdnBhd

100 100 RM14.5 RM14.5 Provisionofmanagementofcustomerscareservicesandtradingofcustomerpremisestelecommunicationequipment

TelekomTechnologySdnBhd 100 100 RM13.0 RM13.0 Ceasedoperations

TMBroadcastingSdnBhd 100 100 RM# RM# Dormant

TMESOSManagementSdnBhd 100 100 RM0.1 RM0.1 Specialpurposeentity

TMFacilitiesSdnBhd 100 100 RM2.3 RM2.3 Provisionofpropertydevelopmentactivities

TMGlobalIncorporated 100 100 USD# USD# Investmentholding

TMInfo-MediaSdnBhd 100 100 RM6.0 RM6.0 Publicationofprintedandonlinetelephonedirectoriesservicesaswellasprovisionofmultiplatformsolutionsforadvertising

TMInternational(Cayman)Ltd 100 100 USD# USD# Dormant

TMNetSdnBhd 100 100 RM180.0 RM180.0 ContentandapplicationdevelopmentforInternetservices

TMSPVSdnBhd> – 100 RM# RM# Dissolvedon29March2012

UniversitiTelekomSdnBhd 100 100 RM650.0 RM650.0 ManagingandadministeringaprivateuniversityknownasMultimediaUniversity

VADSBerhad 100 100 RM5.0 RM5.0 Provisionofmanagednetworkservices,networksystemintegrationservicesandnetworkcentricservices

51. LIST OF SUBSIDIARIES AS AT 31 DECEMBER 2012 (CONTINUED)Thesubsidiariesareasfollows:(continued)

376





Name of Company2012

%2011

%2012

Million2011


Subsidiaries held through Tekad Mercu Berhad

Mediatel(Malaysia)SdnBhd(inliquidation)<

100 100 RM# RM# Investmentholding

RebungUtamaSdnBhd~(inliquidation)

100 100 RM# RM# Specialpurposeentity

Subsidiary held through TM Info-Media Sdn Bhd

CybermallSdnBhd 100 100 RM2.7 RM2.7 Ceasedoperations

Subsidiaries held through TM Facilities Sdn Bhd

TMFAutoleaseSdnBhd 100 100 RM1.0 RM1.0 Provisionoffleetmanagementservices

TMFServicesSdnBhd 100 100 RM1.0 RM1.0 Ceasedoperations

Subsidiaries held through Universiti Telekom Sdn Bhd

UniteleMultimediaSdnBhd 100 100 RM1.0 RM1.0 Provisionoftrainingandrelatedservices

MultimediaCollegeSdnBhd 100 100 RM1.0 RM1.0 ManagingandadministeringaprivatecollegeknownasMultimediaCollege

Subsidiary held through Unitele Multimedia Sdn Bhd

MMUCreativistaSdnBhd 100 100 RM# RM# Provisionofdigitalvideoandfilmproductionandpostproductionservices

Subsidiaries held through VADS Berhad

MeganetCommunicationsSdnBhd

100 100 RM11.0 RM11.0 Todevelop,operateandprovideIntelligentBuildingSystems,IntelligentSecurity,IntegratedTelecommunicationsandInformationTechnologySolutionstoboththeGovernmentandprivatesectors


377





Name of Company2012

%2011

%2012

Million2011


VADSBusinessProcessSdnBhd

100 100 RM10.0 RM10.0 Provisionofmanagedcontactcentreservices

VADSe-ServicesSdnBhd 100 100 RM1.0 RM1.0 Provisionofmanagedinformationtechnologyservices,managedapplicationservicesandcontactcentreservice

VADSProfessionalServicesSdnBhd

100 100 RM# RM# Dormant

VADSSolutionsSdnBhd 100 100 RM1.5 RM1.5 Provisionofsystemintegrationservices

Subsidiary held through VADS Business Process Sdn Bhd

PTVADSIndonesia(collectivelywithVADSBerhad)^

100 100 IDR17,052.8 IDR17,052.8 ProvisionofmanagedcontactcentreservicesinIndonesia

AllsubsidiariesareincorporatedinMalaysiaexceptthefollowing:

Name of Company Place of Incorporation

PTVADSIndonesia –IndonesiaTelekomMalaysia(HongKong)Limited –HongKongTelekomMalaysia(S)PteLtd –SingaporeTelekomMalaysia(UK)Limited –UnitedKingdomTelekomMalaysia(USA)Inc –USATMInternational(Cayman)Ltd –BritishWestIndies,USA

IDR IndonesianRupiahHKD HongKongDollarSGD SingaporeDollarGBP PoundSterlingUSD USDollar


378




51. LIST OF SUBSIDIARIES AS AT 31 DECEMBER 2012 (CONTINUED)# Amountslessthan0.1millionintheirrespectivecurrencies

* AuditedbyamemberfirmofPricewaterhouseCoopersInternationalLimitedwhich isaseparateand independentlegalentityfromPricewaterhouseCoopersMalaysia.

@ Dissolvedon20July2012pursuanttoSection239(d)oftheCompaniesAct,1965.

> Dissolvedon29March2012pursuanttoSection272(5)oftheCompaniesAct,1965.

<< On28September2012,MenaraKualaLumpurSdnBhdmadeacapitalrepaymentofRM81.0millionuponapprovalbytheKualaLumpurCourton18August2012,pursuanttoSection64oftheCompaniesAct,1965.

< Granted order for members’ voluntary winding up pursuant to Section 254(1)(b) of the Companies Act, 1965 on25November2011includingappointmentofliquidator.

~ Granted order for members’ voluntary winding up pursuant to Section 254(1)(b) of the Companies Act, 1965 on15December2011includingappointmentofliquidator.

^ VADSBerhadandVADSBusinessProcessSdnBhdholdadirectinterestof10.0%and90.0%respectivelyinPTVADSIndonesia.

52. LIST OF ASSOCIATES AS AT 31 DECEMBER 2012Theassociatesareasfollows:

Group’s Effective Interest

Name of Company2012

%2011

% Principal Activities

Associates held through Telekom Multi-Media Sdn Bhd

MahirnetSdnBhd(inliquidation)

49 49 GrantedOrderforCreditors’windingupbytheKualaLumpurHighCourtpursuanttoSection217oftheCompaniesAct,1965

Mutiara.ComSdnBhd 30 30 ProvisionandpromotionofInternet-basedcommunicationsservices

AllassociatesareincorporatedinMalaysia.Allassociateshaveco-terminousfinancialyearendwiththeCompany.

53. CURRENCYAllamountsareexpressedinRinggitMalaysia(RM).

54. APPROVAL OF FINANCIAL STATEMENTSThefinancialstatementshavebeenapprovedforissuanceinaccordancewitharesolutionoftheBoardofDirectorson27February2013.

379




55. SUPPLEMENTARY INFORMATION PURSUANT TO BURSA MALAYSIA SECURITIES BERHAD LISTING REqUIREMENTSRealised and Unrealised Profits

On25March2010,BursaMalaysiaSecuritiesBerhad(BursaMalaysia)issuedadirectivetoalllistedissuerspursuanttoParagraphs2.06and2.23ofBursaMalaysiaMainMarketListingRequirements.Thedirectiverequiresalllistedissuerstodisclosethebreakdownoftheunappropriatedprofitsoraccumulatedlossesasattheendofthereportingperiod,intorealisedandunrealisedprofitsorlosses.On20December2010,BursaMalaysiafurtherissuedguidanceonthedisclosureandtheformatrequired.

ThebreakdownofretainedprofitsoftheGroupandtheCompanyasatthereportingdate, intorealisedandunrealisedprofits,pursuanttothedirective,isasfollows:


2012RM

2011RM

2012RM

2011RM

Retainedprofits:–realised 2,801.1 2,827.9 3,422.2 3,506.8–unrealised –inrespectofdeferredtaxrecognisedinthe

IncomeStatements (1,184.0) (1,520.1) (1,076.7) (1,438.8) –inrespectofotheritemsofincomeandexpense 973.2 874.4 694.8 592.4Shareofaccumulatedlossesofassociates–realised – (0.9) – –

2,590.3 2,181.3 3,040.3 2,660.4Add:consolidationadjustments 1,599.9 1,446.4 – –

TOTAL RETAINED PROFITS 4,190.2 3,627.7 3,040.3 2,660.4

ThedeterminationofrealisedandunrealisedprofitsisbasedontheGuidanceofSpecialMatterNo.1,DeterminationofRealisedandUnrealisedProfitsorLosses in theContextofDisclosurePursuant toBursaMalaysiaSecuritiesBerhadListingRequirements,asissuedbytheMalaysianInstituteofAccountantson20December2010.

380




Statement by Directors pursuanttoSection169(15)oftheCompaniesAct,1965

Statutory Declaration pursuanttoSection169(16)oftheCompaniesAct,1965

We,Dato’SriDrHalimShafieandDato’SriZamzamzairaniMohdIsa,twooftheDirectorsofTelekomMalaysiaBerhad,statethat,intheopinionoftheDirectors,thefinancialstatementsonpages242to379aredrawnupsoastoexhibitatrueandfairviewofthestateofaffairsoftheGroupandtheCompanyasat31December2012andoftheresultsandthecashflowsoftheGroupandtheCompanyforthefinancialyearendedonthatdateinaccordancewithMalaysianFinancialReportingStandards,InternationalFinancialReportingStandardsandtherequirementsoftheCompaniesAct,1965.

Thesupplementaryinformationsetoutinnote55onpage380havebeenpreparedinaccordancewiththeGuidanceofSpecialMatter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to BursaMalaysiaSecuritiesBerhadListingRequirements,asissuedbytheMalaysianInstituteofAccountants.

InaccordancewitharesolutionoftheBoardofDirectorsdated27February2013.

DATO’ SRI DR HALIM SHAFIE DATO’ SRI ZAMZAMZAIRANI MOHD ISADirector/Chairman Managing Director/Group Chief Executive Officer

I, Datuk Bazlan Osman, the Director primarily responsible for the financial management of Telekom Malaysia Berhad, dosolemnlyandsincerelydeclarethefinancialstatementssetoutonpages242to379are, inmyopinion,correctandImakethis solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the StatutoryDeclarationsAct,1960.

Subscribedandsolemnly )declaredatKualaLumpur )this27February2013. ) DATUK BAZLAN OSMAN

Beforeme:

Commissioner for OathsKualaLumpur

381



REPORT ON THE FINANCIAL STATEMENTSWehaveauditedthefinancialstatementsofTelekomMalaysiaBerhadonpages242to250whichcomprisethestatementsoffinancialpositionasat31December2012oftheGroupandoftheCompany,andthestatementsof income,comprehensiveincome,changesinequityandcashflowsoftheGroupandoftheCompanyfortheyearthenended,andasummaryofsignificantaccountingpoliciesandotherexplanatorynotes,assetoutonpages251to379.

Directors’ Responsibility for the Financial Statements

The directors of the Company are responsible for the preparation of financial statements that give a true and fair view inaccordancewithMalaysianFinancialReportingStandards,InternationalFinancialReportingStandards,andtheCompaniesAct,1965,inMalaysia,andforsuchinternalcontrolastheDirectorsdeterminearenecessarytoenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

Auditors’ Responsibility

Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithapprovedstandardsonauditinginMalaysia.Thosestandardsrequirethatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassurancewhetherthefinancialstatementsarefreefrommaterialmisstatement.

Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancialstatements.Theproceduresselecteddependonourjudgment,includingtheassessmentofrisksofmaterialmisstatementofthefinancialstatements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to theentity’spreparationoffinancialstatementsthatgiveatrueandfairviewinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrol.AnauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebytheDirectors,aswellasevaluatingtheoverallpresentationofthefinancialstatements.

Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with Malaysian Financial ReportingStandards,InternationalFinancialReportingStandardsandtheCompaniesAct,1965soastogiveatrueandfairviewofthefinancialpositionoftheGroupandoftheCompanyasof31December2012andoftheirfinancialperformanceandcashflowsfortheyearthenended.

Independent Auditors’ ReporttotheMembersofTelekomMalaysiaBerhad

(CompanyNo.128740-P)382




Independent Auditors’ ReporttotheMembersofTelekomMalaysiaBerhad(CompanyNo.128740-P)

REPORT ON OTHER LEGAL AND REGULATORY REqUIREMENTSInaccordancewiththerequirementsoftheCompaniesAct,1965inMalaysia,wealsoreportthefollowing:

(a) Inouropinion,theaccountingandotherrecordsandtheregistersrequiredbytheActtobekeptbytheCompanyanditssubsidiariesofwhichwehaveactedasauditorshavebeenproperlykeptinaccordancewiththeprovisionsoftheAct.

(b) Wehaveconsideredthefinancialstatementsandtheauditors’reportsofallthesubsidiariesofwhichwehavenotactedasauditors,whichareindicatedinnote51tothefinancialstatements.

(c) WearesatisfiedthatthefinancialstatementsofthesubsidiariesthathavebeenconsolidatedwiththeCompany’sfinancialstatementsareinformandcontentappropriateandproperforthepurposesofthepreparationofthefinancialstatementsoftheGroupandwehavereceivedsatisfactoryinformationandexplanationsrequiredbyusforthosepurposes.

(d) TheauditreportsonthefinancialstatementsofthesubsidiariesdidnotcontainanyqualificationoranyadversecommentmadeunderSection174(3)oftheAct.

OTHER REPORTING RESPONSIBILITIESThesupplementaryinformationsetoutinnote55onpage380isdisclosedtomeettherequirementofBursaMalaysiaSecuritiesBerhadand isnotpartof thefinancialstatements.TheDirectorsareresponsible for thepreparationof thesupplementaryinformation in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits orLosses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by theMalaysianInstituteofAccountants(“MIAGuidance”)andthedirectiveofBursaMalaysiaSecuritiesBerhad.Inouropinion,thesupplementaryinformationisprepared,inallmaterialrespects,inaccordancewiththeMIAGuidanceandthedirectiveofBursaMalaysiaSecuritiesBerhad.

OTHER MATTERSThisreportismadesolelytothemembersoftheCompany,asabody,inaccordancewithSection174oftheCompaniesAct,1965inMalaysiaandfornootherpurpose.Wedonotassumeresponsibilitytoanyotherpersonforthecontentofthisreport.

PRICEWATERHOUSECOOPERS IRVIN GEORGE LUIS MENEZES(AF:1146) (No.2932/06/14(J))Chartered Accountants Chartered Accountant

KualaLumpur27February2013

383



Authorised and Issued Share Capital

asat20March2013

AttheExtraordinaryGeneralMeeting(EGM)oftheCompanyheldon8May2012,theshareholdershaveapprovedtheProposedCapitalRepaymentofapproximatelyRM1,073.2millionorRM0.30cashforeachordinaryshareofRM1.00eachtoshareholdersintheCompany(CapitalRepayment).AtthesameEGM,theshareholdershavealsoapprovedtheamendmentstotheCompany’sMemorandumandArticlesofAssociation(M&A)toreflectthereductionintheparvalueofeachordinarysharefromRM1.00toRM0.70(CapitalReduction)andotheramendmentsasstatedintheCirculartoShareholdersdated12April2012.

Subsequentlyon13July2012,theHighCourtofMalayahadgrantedanorderconfirmingtheCapitalReductiontobecarriedoutbasedon thespecial resolutionapprovedby theshareholdersat theEGM.CompaniesCommissionofMalaysiahadon1August2012,confirmedtheCapitalReductioninaccordancewithSection64oftheCompaniesAct,1965.

1. AUTHORISED SHARE CAPITAL

The authorised share capital of the Company is RM3,528,003,015.00 divided into 5,040,000,020 ordinary shares ofRM0.70 each; one (1) Special Rights Redeemable Preference Share (Special Share) of RM1.00; 2,000 Class CNon-ConvertibleRedeemablePreferenceShares(NCRPS)ofRM1.00each;and1,000ClassDNCRPSofRM1.00each.

Thechangesintheauthorisedsharecapitalareasfollows:

Date Type of SharePar value

(RM)No of shares

Created/(Deleted)Cumulative

(RM)

12/10/1984 OrdinaryShares 1.00 1,000,000 1,000,000.00

06/08/1984 OrdinaryShares 1.00 4,999,000,000 5,000,000,000.00

11/09/1990 SpecialShare 1.00 1 5,000,000,001.00

31/03/2003ClassARedeemablePreferenceShare(RPS) 0.01 1,000 5,000,000,011.00

31/03/2003 ClassBRPS 0.01 1,000 5,000,000,021.00

08/05/2007 ClassCNCRPS 1.00 2,000 5,000,002,021.00

08/05/2007 ClassDNCRPS 1.00 1,000 5,000,003,021.00

07/05/2009 ClassERPS 0.01 4,000,000,000 5,040,003,021.00

10/05/2011 ClassARPS 0.01 (1,000) 5,040,003,011.00

ClassBRPS 0.01 (1,000) 5,040,003,001.00

ClassERPS 0.01 (4,000,000,000) 5,000,003,001.00

OrdinaryShares 1.00 20 5,000,003,021.00

ClassFRPS 0.01 4,000,000,000 5,040,003,021.00

01/08/2012 ClassFRPS 0.01 (4,000,000,000) 5,000,003,021.00

OrdinaryShares 0.70 4,000,000,000 3,528,003,015.00

384


Other Informationwww.tm.com.my


2. ISSUED AND PAID-UP SHARE CAPITAL

The issuedandpaid-upsharecapital isRM2,504,184,312.00comprising3,577,401,980ordinarysharesofRM0.70each;1SpecialShareofRM1.00;2,000ClassCNCRPSofRM1.00each;and925ClassDNCRPSofRM1.00each.

Eachordinarysharecarries1vote.TheSpecialShare,NCRPSCandNCRPSDhavenovotingrightsother thanthosereferredtoonpages289to290ofthefinancialstatements.

Thechangesintheissuedandpaid-upsharecapitalareasfollows:

Date No. of Shares Allotted

Description Cumulative (RM)

31/12/1984 2 Cash 2.0031/12/1986 9,999,998 Cash 10,000,000.0031/12/1987 490,000,000 Bonusissueonthebasisof49ordinarysharesforevery1

existingordinaryshareheld500,000,000.00

11/09/1990 1,000,000,000 Bonusissueonthebasisof2ordinarysharesforevery1existingordinaryshareheld

1,500,000,000.00

11/09/1990 1 SpecialShare 1,500,000,001.0029/10/1990–31/12/1990

470,500,000 IssuedpursuanttotheexerciseofoptionsundertheEmployeesShareOptionScheme(ESOS)

1,970,500,001.00

31/12/1992 9,249,000 Cash 1,979,749,001.00

31/12/1993 6,067,000 IssuedpursuanttotheexerciseofoptionsundertheESOS 1,985,816,001.0031/12/1994 3,555,000 IssuedpursuanttotheexerciseofoptionsundertheESOS 1,989,371,001.0031/12/1995 2,832,000 IssuedpursuanttotheexerciseofoptionsundertheESOS 1,992,203,001.0031/12/1996 6,877,000 IssuedpursuanttotheexerciseofoptionsundertheESOS 1,999,080,001.00

06/06/1997 10,920 Eurobond–Conversionof4%ConvertibleBondsdue2004 1,999,090,921.0020/06/1997 999,545,460 Bonusissueonthebasisof1ordinaryshareforevery2

existingordinarysharesheld2,998,636,381.00

31/12/1998 398,500 IssuedpursuanttotheexerciseofoptionsundertheESOS 2,999,034,881.0031/12/1999 22,408,000 IssuedpursuanttotheexerciseofoptionsundertheESOS 3,021,442,881.0031/12/2000 65,876,500 IssuedpursuanttotheexerciseofoptionsundertheESOS 3,087,319,381.0031/12/2001 13,996,000 IssuedpursuanttotheexerciseofoptionsundertheESOS 3,101,315,381.0031/12/2002 65,692,000 IssuedpursuanttotheexerciseofoptionsundertheESOS 3,167,007,381.0001/01/2003–11/12/2003

71,503,000 IssuedpursuanttotheexerciseofoptionsundertheESOS 3,238,510,381.00

12/12/2003 1,000 IssuanceofClassARPSofRM0.01each 3,238,510,391.0012/12/2003 1,000 IssuanceofClassBRPSofRM0.01each 3,238,510,401.0015/12/2003–31/12/2003


31/12/2004 131,708,000 IssuedpursuanttotheexerciseofoptionsundertheESOS 3,382,440,401.0031/12/2005 9,077,000 IssuedpursuanttotheexerciseofoptionsundertheESOS 3,391,517,401.0031/12/2006 6,139,500 IssuedpursuanttotheexerciseofoptionsundertheESOS 3,397,656,901.00

385


Other Information www.tm.com.my

Authorised and Issued Share Capitalasat20March2013

Date No. of Shares Allotted

Description Cumulative (RM)

04/01/2007–17/07/2007


20/07/2007 (1,000) RedemptionofClassARPSofRM0.01each 3,435,261,891.00

20/07/2007 (1,000) RedemptionofClassBRPSofRM0.01each 3,435,261,881.00

20/07/2007 2,000 IssuanceofClassCNCRPSofRM1.00each 3,435,263,881.00

20/07/2007 925 IssuanceofClassDNCRPSofRM1.00each 3,435,264,806.00

23/07/2007–31/12/2007


17/03/2008 137,592,300 IssuedtoTMESOSManagementSdnBhdasTrusteefortheimplementationofTMSpecialESOS

3,577,404,906.00

02/06/2009 3,577,401,980 IssuanceofClassERPSofRM0.01each 3,613,178,925.80

02/06/2009 (3,577,401,980) RedemptionofClassERPSofRM0.01each 3,577,404,906.00

07/06/2011 3,577,401,980 IssuanceofClassFRPSofRM0.01each 3,613,178,925.80

07/06/2011 (3,577,401,980) RedemptionofClassFRPSofRM0.01each 3,577,404,906.00

01/08/2012 – ReductionofparvalueofeachordinarysharefromRM1.00toRM0.70pursuanttocompletionoftheCapitalReductionexercise

2,504,184,312.00

Note: Increases in the issued and paid-up share capital pursuant to the ESOS are disclosed on annual basis.

386




Analysis of Shareholding Statisticsasat20March2013

SUBSTANTIAL SHAREHOLDERS’ HOLDINGS OF 5% AND ABOVEasperRegisterofSubstantialShareholders

No. Name No. of Shares Held Percentage (%)

Direct Indirect Direct Indirect

1. KhazanahNasionalBerhad 1,027,841,692 – 28.73 –2. EmployeesProvidentFundBoard 510,153,800 – 14.26 –3. AmanahRayaTrusteesBerhad

– Skim Amanah Saham Bumiputera 439,719,500 – 12.29 –

TOTAL 1,977,714,992 – 55.28 –

DIRECTORS’ DIRECT AND DEEMED INTEREST IN THE COMPANYasperRegisterofDirectors’Shareholding

Interest in the Company Number of ordinary shares of RM0.70 each

DirectDeemedInterest

Percentage (%)

Dato’SriDrHalimShafie – 8,000# *Dato’SriZamzamzairaniMohdIsa 5,000 4,000# *DatukBazlanOsman 2,000 – *

Note:# DeemedinterestinTMsharesheldbyspouse.* Lessthan0.01%.

387



Analysis of Shareholding Statisticsasat20March2013

List of Top 30 Shareholdersasat20March2013

DISTRIBUTION OF SHAREHOLDINGS

Shareholders Shares

Malaysian Foreign Malaysian Foreign

Size of Shareholdings No % No % No % No %

Less than 100 896 3.29 6 0.02 6,045 0.00 29 0.00100 – 1,000 8,964 32.93 118 0.43 7,735,150 0.22 96,616 0.001,001 – 10,000 14,321 52.61 293 1.08 52,875,300 1.48 1,296,032 0.0410,001 – 100,000 1,741 6.40 223 0.82 46,351,106 1.30 8,525,938 0.24100,001–178,870,098

(lessthan5%ofpaid-upcapital) 373 1.37 283 1.04 1,127,317,021 31.51 481,452,682 13.46178,870,099andabove 3 0.01 0 0.00 1,851,746,061 51.76 0 0.00

TOTAL 26,298 96.61 923 3.39 3,086,030,683 86.26 491,371,297 13.74

DISTRIBUTION OF PREFERENCE SHARES IN ACCORDANCE WITH THEIR RESPECTIVE CLASSES

Special Share NCRPS C NCRPS D

Shareholder Share Shareholder Share Shareholder Share

Category Malaysian % Malaysian % Malaysian % Malaysian % Malaysian % Malaysian %

Lessthan100 1 100.00 1 100.00 1 33.33 25 1.25 0 0.00 0 0.00100–1,000 0 0.00 0 0.00 1 33.33 400 20.00 2 100.00 925 100.001,001–10,000 0 0.00 0 0.00 1 33.33 1,575 78.75 0 0.00 0 0.00

TOTAL 1 100.00 1 100.00 3 100.00 2,000 100.00 2 100.00 925 100.00

No. NameNo. of

Shares HeldPercentage

(%)

1. KhazanahNasionalBerhad 939,051,961 26.252. CitigroupNominees(Tempatan)SdnBhd

– Employees Provident Fund Board472,974,600 13.22

3. AmanahRayaTrusteesBerhad– Skim Amanah Saham Bumiputera

439,719,500 12.29

4. KumpulanWangPersaraan(Diperbadankan) 128,660,200 3.605. AmanahRayaTrusteesBerhad

– Amanah Saham Wawasan 202091,581,000 2.56

6. KhazanahNasionalBerhad– Exempt An

88,789,731 2.48

7. MaybankNominees(Tempatan)SdnBhd– Maybank Trustees Berhad for Public Ittikal Fund (N14011970240)

61,390,800 1.72

388




No. NameNo. of

Shares HeldPercentage

(%)

8. AmanahRayaTrusteesBerhad– AS 1Malaysia

54,932,600 1.54

9. ValuecapSdnBhd 53,850,000 1.5010. AmanahRayaTrusteesBerhad

– Amanah Saham Malaysia52,085,600 1.45

11. HSBCNominees(Asing)SdnBhd– Exempt An for the Bank of New York Mellon (Mellon Acct)

46,048,442 1.29

12. CartabanNominees(Tempatan)SdnBhd– Exempt An for Eastspring Investments Berhad

36,087,200 1.01

13. CartabanNominees(Asing)SdnBhd– Exempt An for State Street Bank & Trust Company (West CLT OD67)

35,470,387 0.99

14. AmanahRayaTrusteesBerhad– Public Islamic Dividend Fund

31,425,200 0.88

15. LembagaTabungHaji 30,386,600 0.8516. PermodalanNasionalBerhad 29,490,800 0.8217. AmanahRayaTrusteesBerhad

– Amanah Saham Didik28,024,500 0.78

18. MalaysiaNominees(Tempatan)SendirianBerhad– Great Eastern Life Assurance (Malaysia) Berhad (Par 1)

27,199,000 0.76

19. HSBCNominees(Asing)SdnBhd– BBH and Co Boston for Vanguard Emerging Markets Stock Index Fund

25,363,640 0.71

20. HSBCNominees(Asing)SdnBhd– Exempt An for JPMorgan Chase Bank, National Association (Norges BK Lend)

20,278,200 0.57

21. HSBCNominees(Asing)SdnBhd– BBH and Co Boston for Matthews Asian Growth and Income Fund

20,245,551 0.56

22. HSBCNominees(Asing)SdnBhd– BBH and Co Boston for Blackrock Global Allocation Fund, Inc.

18,755,434 0.52

23. AmanahRayaTrusteesBerhad– Public Islamic Equity Fund

17,949,600 0.50

24. MaybankNominees(Tempatan)SdnBhd– Maybank Trustees Berhad for Public Regular Savings Fund (N14011940100)

17,827,100 0.50

25. CitigroupNominees(Tempatan)SdnBhd– Exempt an for American International Assurance Berhad

16,392,500 0.46

26. CitigroupNominees(Asing)SdnBhd– Citibank International Plc as Trustee for Standard Life Pacific Basin Trust (CBLDN)

15,967,700 0.45

27. AmsecNominees(Tempatan)SdnBhd– AmTrustee Berhad for CIMB Islamic DALI Equity Growth Fund (UT-CIMB-DALI)

15,789,200 0.44

28. CitigroupNominees(Tempatan)SdnBhd– Employees Provident Fund Board (Nomura)

15,467,400 0.43

29. AmanahRayaTrusteesBerhad– Public Islamic Select Enterprises Fund

15,420,400 0.43

30. AmanahRayaTrusteesBerhad– Public Growth Fund

14,855,000 0.42

TOTAL 2,861,479,846 79.99

389



Net Book Value of Land & Buildings

asat31December2012

Freehold Leasehold Other Land* Excepted Land** Net BookValue ofLand***

(RM Million)

Net BookValue of

Buildings#

(RM Million)

No. of Area No. of Area No. of Area No. of Area

Location Lots (‘000 sq ft) Lots (‘000 sq ft) Lots (‘000 sq ft) Lots (‘000 sq ft)

1. FederalTerritorya. KualaLumpur 29 1,543 3 155 2 194 – – 281.5 1,043.7

b.Labuan – – 6 511 – – – – – –c. Putrajaya – – – – 1 20 – – – –

2. Selangor 10 10,308 23 25,221 3 183 68 6,020 545.4 426.43. Perlis – – 4 52 – – 8 572 0.3 0.84. Perak 4 17 19 926 5 296 86 5,363 4.2 32.15. PulauPinang 3 5,015 15 919 – – 39 6,838 4.8 20.06. Kedah 8 487 14 1,492 – – 45 2,553 10.1 39.37. Johor 4 106 29 1,455 10 329 94 7,990 6.8 42.88. Melaka 3 15 27 55,682 – – 23 4,039 15.8 164.69. NegeriSembilan 7 33,244 11 395 5 266 49 2,186 34.2 20.210. Terengganu – – 16 797 – – 43 5,082 0.6 22.111. Kelantan – – 10 552 3 45 35 2,058 0.5 8.012. Pahang 3 43 28 2,170 8 532 65 6,256 2.2 22.413. Sabah – – 14 184 4 162 61 24,269 3.9 27.114. Sarawak 5 202 28 1,023 10 400 96 11,203 16.7 42.815. HongKong – – – – – – – – – 49.5

Total 76 50,980 247 91,534 51 2,427 712 84,429 927.0 1,961.8

Asexplainedinnote50(a)(ii)tothefinancialstatements,freeholdlandhasbeenrevaluedarisingfromtheGroup’stransitiontoMFRS.Norevaluationhasbeenmadeonanyofthebuildings.

* Thetitledeedspertainingtootherlandhavenotyetbeenregistered inthenameoftheCompany.Pendingfinalisationwiththerelevantauthorities, thelandshavenotbeenclassifiedaccordingtotheirtenureandlandareasarebasedonestimation.

** ExceptedlandarelandssituatedoutsidetheFederalTerritorywhichareeitheralienatedland,reservedlandownedbytheFederalGovernmentorlandoccupied,used,controlledandmanagedbytheFederalGovernmentforfederalpurposes(inMelaka,PulauPinang,SabahandSarawak)assetoutinSection3(2)oftheTelecommunicationServices(SuccessorCompany)Act,1985.TheGovernmenthasagreedtoleasetheselandstoTelekomMalaysiaBerhadforatermof60yearswithanoptiontorenew,underarticle85and86oftheFederalConstitution.

*** Includeslandheldforpropertydevelopmentandlandheldforsaleofawhollyownedsubsidiary,andinvestmentpropertyandnon-currentassetsheldforsaleoftheCompany.

# Includesinvestmentpropertyandnon-currentassetsheldforsaleoftheCompany.

390




Usage of Propertiesasat31December2012

Location ExchangesTransmission

StationsOffice

Buildings ResidentialStores/

Warehouses

Satellite/ Submarine

Cable Stations Resort

TMpoint/ Primatel/ Business

Centre

University/ Training College

Telecom-munications/

Tourism Tower

1. FederalTerritory

a.KualaLumpur 13 2 6 6 – – – – 1 –

b.Labuan 1 – 1 – – 2 – – – –

2. Selangor 75 8 6 7 3 – – 4 1 –

3. Perlis 8 1 1 2 1 – – 1 – –

4. Perak 85 10 3 12 2 – – 4 1 –

5. PulauPinang 40 1 3 4 2 1 1 4 – –

6. Kedah 44 7 1 3 1 – 1 4 – 1

7. Johor 90 11 3 3 2 1 – 2 – –

8. Melaka 30 1 1 1 1 2 – 2 1 –

9. NegeriSembilan 45 8 3 2 – – 4 2 – –

10. Terengganu 44 4 2 3 2 – – 2 1 –

11. Kelantan 30 2 2 4 2 – – – – –

12. Pahang 56 14 2 11 2 3 4 – – –

13. Sabah 46 18 1 3 2 3 1 4 – –

14. Sarawak 76 24 2 8 2 3 – 3 1 –

391



Group Directory

RETAIL BUSINESSCustomer Service ManagementLevel20,TMAnnexe2No.1,JalanPantaiJaya59200KualaLumpurTel : 03-22402001 03-22408960Fax : 03-22412155

Network Management Command CentreGroundFloorKompleksTMNOC3300LingkaranUsahawan1Timur63000CyberjayaSelangorTel : 1-800-88-9947

GITN Sdn BerhadHead OfficeLevel31,MenaraTMJalanPantaiBaharu50672KualaLumpurTel : 03-22450000Fax : 03-22400709

Network Operations CentreLevel13Annexe1TMBerhad50672JalanPantaiBaharuKualaLumpurTel : 03-22402948Fax : 03-22411424

HEAD OFFICElevel 51, North WingMenara tM, Jalan Pantai Baharu50672 Kuala lumpurtel : 03-2240 9494 : 101 Operator assisted Calls (Domestic and international) : 103 Directory Enquiry services : 100 for Everything else tMfax : 03-2283 2415Website : www.tm.com.my

TM Info-Media Sdn Bhd9thFloor,BlockAMinesWaterfrontBusinessParkNo.3,JalanTasikTheMinesResortCity43300SeriKembanganSelangorTel : 03-89498228Fax : 03-89498338

Telekom Applied Business Sdn BhdHead OfficeLevel16,Menara2FaberTowerJalanDesaBahagiaTamanDesaJalanKlangLama58100KualaLumpurTel : 03-79844989Fax : 03-79801605

Cyberjaya OfficeLevel2KompleksTMCyberjaya3300LingkaranUsahawan1Timur63000Cyberjaya,SelangorTel : 03-83181706Fax : 03-83181721

Telekom Research & Development Sdn BhdHead OfficeTMInnovationCentreLingkaranTeknokratTimur63000CyberjayaSelangorTel : 03-88839595Fax : 03-88839596

VADS BerhadLevel15,PlazaVADSNo.1,JalanTunMohdFuadTamanTunDrIsmail60000KualaLumpurTel : 03-77128888Fax : 03-77282584

Telekom Sales & Services Sdn BhdHead OfficeLevel38NorthWing,MenaraTMJalanPantaiBaharu50672KualaLumpurTel : 03-22403000Fax : 03-22413000

392




STATE TMPOINT ADDRESS

KUALA LUMPUR TMpointMuzium BangunanMuziumTM,JalanRajaChulan,50200KualaLumpur

TMpointJalanTAR No.374,GroundFloor,WismaCSHoliday,JalanTuankuAbdulRahman50100KualaLumpur

TMpointPandanIndah L1/O2,GroundFloor,MenaraMaxisegar,JalanPandanIndah4/2,PandanIndah,55100KualaLumpur

TMpointMenara GroundFloor,MenaraTM,JalanPantaiBaharu,50672KualaLumpur

TMpointBangsar No.8&10,GroundFloor,JalanTelawi5,BangsarBaru59100KualaLumpur

TMpoint@UTCKL LotT3-17,Tingkat3,UTCKL@PuduSentral,JalanPudu55100KualaLumpur

SELANGOR TMpointSetapak IbusawatTMSetapak,44,PersiaranKuantan,53200KualaLumpur

TMpointAmpang 42,JalanMamanda7,AmpangPoint,68000Ampang,Selangor

TMpointKepong No.67,JalanMetroPerdana,Barat1,TamanUsahawanKepong52100Kepong,KualaLumpur

TMpointRawang Lot21,JalanMaxwell,48000Rawang,Selangor

TMpointKualaKubuBahru BangunanTM,JalanDato’Balai,44000KualaKubuBahru,Selangor

TMpointBukitRaja JalanMeru,41050Kelang,Selangor

TMpointShahAlam BangunanTMShahAlam,PersiaranDamai,Seksyen1140000ShahAlam,Selangor

TMpointBanting No.1-1-1A,JalanSuasa1,42700Banting,Selangor

TMpointKualaSelangor BangunanTM,JalanKlinik,45000KualaSelangor,Selangor

TMpointSabakBernam 27,JalanRajaChulan,45200SabakBernam,Selangor

TMpointPortKlang No.57&59,JalanCungah,42000PortKlang,Selangor

PETALING JAYA TMpointDamansaraUtama No.91-93,JalanSS21/1A,DamansaraUtama,47400PetalingJayaSelangor

TMpointPetalingJaya No.22&24,JalanYongShookLin,46050PetalingJaya,Selangor

TMpointKajang No.37&38,JalanTunAbdulAziz,43000Kajang,Selangor

TMpointTamanDesa GroundFloor,WismaTMTamanDesa,JalanDesaUtama58100KualaLumpur

TMpointKelanaJaya Unit109B,GroundFloor,KelanaParkViewTower,No.1,JalanSS6/247301KelanaJaya,Selangor

TMpointSunwayDamansara UnitC-08,GroundFloor&1stFloor,JalanPJU5/17,DataranSunway47810KotaDamansara,Selangor

MSC TMpointCyberjaya GroundFloor,TMITComplex,3300LingkaranUsahawan1Timur60000Cyberjaya,Selangor

TMpointSerdang No.36,JalanDagangSB4/2,TamanSungaiBesiIndah43300SeriKembangan,Selangor

393



Group Directory


TMpointTaipan No.27&29,JalanUSJ10/1A,47620SubangJaya,Selangor

TMpointPuchong No.12&13,JalanKenari5,BandarPuchongJaya47100Puchong,Selangor

NEGERI SEMBILAN TMpointSeremban No.176&177,GroundFloor,JalanDato’BandarTunggal70000Seremban,NegeriSembilan

TMpointPortDickson No.25,JalanMahajaya,PDCenterPoint,71000PortDicksonNegeriSembilan

TMpointKualaPilah JalanBahau,72000KualaPilah,NegeriSembilan

TMpointTampin JalanBesar,73000Tampin,NegeriSembilan

MELAKA TMpointMelaka 527&529A,PlazaMelaka,JalanGajahBerang,75200Melaka

TMpointAlorGajah Batu14½,JalanMelakaKendong,78000AlorGajah,Melaka

TMpointMenaraPertam GroundFloor,MenaraPertam,JalanBatuBerendamBBP2TamanBatuBerendamPutra,75350Melaka

TMpoint@UTCMelaka Aras3,BangunanUTC,WismaDMDI,JalanHangTuah,75300Melaka

JOHOR TMpointJohorBahru JalanAbdullahIbrahim,80672JohorBahru,Johor

TMpointSkudai No.17&19,JalanLaksamana1,TamanUngkuTunAminah81300Skudai,Johor

TMpointPontian Level1,IbusawatTM,JalanAlsagoff,82000Pontian,Johor

TMpointKluang No.1&2,JalanDatoTeohSiewKhor,86000Kluang,Johor

TMpointSegamat No.22,JalanSultan,85000Segamat,Johor

TMpointBatuPahat 39,JalanRahmat,83000BatuPahat,Johor

TMpointMuar No.5-5&5-6,GroundFloor,JalanIbrahim,84000Muar,Johor

TMpointKotaTinggi No.2&4,JalanIndah,TamanMedanIndah,81900KotaTinggi,Johor

TMpointKulai Lot435,JalanKenanga29/11,TamanIndahPutra81100Kulai,Johor

TMpointPelangi WismaTMPelangi,JalanSutera3,TamanSentosa80150JohorBahru,Johor

TMpointMersing Lot384,JalanIsmail,86800Mersing,Johor

TMpointYongPeng No.18,GroundFloor,JalanBayan,TamanSemberong83700YongPeng,Johor

TMpointPasirGudang No.23A,GroundFloor,JalanBandarPusatPerdagangan81700PasirGudang,Johor

KEDAH/PERLIS TMpointKangar JalanBukitLagi,PekanKangar,01000Kangar,Perlis

TMpointAlorSetar KompleksKristal,JalanKolamAir,05672AlorSetar,Kedah

TMpointJitra 19A,JalanPJ1,PekanJitra2,06000Jitra,Kedah

TMpointLangkawi JalanPandakMayah6,07000PekanKuah,Langkawi,Kedah

TMpointSungaiPetani BangunanTM,JalanPetani,08000SungaiPetani,Kedah

TMpointKulim No.4&5,JalanTunkuAsaad,09000Kulim,Kedah

394





PULAU PINANG TMpointBayanBaru No.68,JalanMahsuri,11950BayanBaru,PulauPinang

TMpointJlnBurmah JalanBurmah,10050Georgetown,PulauPinang

TMpointButterworth WismaTMButterworth,GroundFloor,JalanBaganLuar12000Butterworth,PulauPinang

TMpointBukitMertajam LotG-33,G-34,G-35,JalanPerdaSelatan,BandarPerda14000BukitMertajam,PulauPinang

TMpointSungaiBakap 1282,JalanBesar,14200SungaiBakap,PulauPinang

PERAK TMpointIpohWisma WismaTM,JalanSultanIdrisShah,30672Ipoh,Perak

TMpointBatuGajah BangunanTM,JalanDewangsa,31000BatuGajah,Perak

TMpointIpohTasek JalanSultanAzlanShahUtara,31400Ipoh,Perak

TMpointKampar BangunanTM,JalanBaru,31900Kampar,Perak

TMpointTaiping BangunanTM,JalanBerek,34672Taiping,Perak

TMpointTelukIntan BangunanTM,JalanJawa,36672TelukIntan,Perak

TMpointParitBuntar 36,PersiaranPerwira,PusatBandar,34200ParitBuntar,Perak

TMpointKualaKangsar BangunanTM,JalanRajaChulan,33000KualaKangsar,Perak

TMpointGerik WismaKosek,JalanTakongDatoh,33300Gerik,Perak

TMpointSungaiSiput No.188,JalanBesar,31100SungaiSiput,Perak

TMpointSitiawan 179&180,TamanSitiawanMaju,32000Sitiawan,Perak

TMpointTapah BangunanTM,JalanStesyen,35672Tapah,Perak

TMpointTanjungMalim No.27,JalanCahaya,TamanAnggerikDesa,35900TanjungMalim,Perak

TMpoint@UTCPerak LotNo.LB-7,UrbanTransformationCentre(UTC)Perak(knownasPasarBesarIpoh),OffJalanDato’OnnJaafar,30300Ipoh,Perak

KELANTAN TMpointKotaBharu JalanDoktor,15000KotaBharu,Kelantan

TMpointPasirMas 606,JalanMasjidLama,17000PasirMas,Kelantan

TMpointTanahMerah 4088,JalanIsmailPetra,17500TanahMerah,Kelantan

TMpointKualaKrai Lot1522,JalanTengkuZainalAbidin,18000KualaKrai,Kelantan

TMpointPasirPuteh 258B,JalanSekolahLaki-laki,16800PasirPuteh,Kelantan

TERENGGANU TMpointKualaTerengganu Level1,BangunanTM,JalanSultanIsmail,20200K.Terengganu,Terengganu

TMpointKemaman JalanMasjid,Chukai,24000Kemaman,Terengganu

TMpointDungun JalanNibong,23000Dungun,Terengganu

TMpointJerteh GroundFloor,Lot174,JalanTuanHitam,22000Jerteh,Terengganu

PAHANG TMpointKuantan G08&G09,GroundFloor,BangunanMahkotaSquare,JalanMahkota,25000Kuantan,Pahang

TMpointPekan No.87,JalanSultanAbdullah,26600Pekan,Pahang

395



Group Directory


TMpointMentakab JalanTunRazak,28400Mentakab,Pahang

TMpointBentong 111,Bgn.PersatuanBolaSepak,JalanAhPeng,28700Bentong,Pahang

TMpointKualaLipis 10,JalanBukitBius,27200KualaLipis,Pahang

TMpointRaub JalanKualaLipis,27600Raub,Pahang

SABAH TMpointSadongJaya Lot68&69,BlockJ,GroundFloor,SadongJaya,Karamunsing,88100KotaKinabalu,Sabah

TMpointTanjungAru LotB3,B3A&B5,GroundFloor,PlazaTg.Aru,JalanMatSalleh,TanjungAru,88100KotaKinabalu,Sabah

TMpointTawau TB307,Blok35,KompleksFajar,JalanPerbandaran,91000Tawau,Sabah

TMpointLahadDatu GroundFloor,MDLD3307,FajarKomplek,JalanSegama,91100LahadDatu,Sabah

TMpointSandakan Lot6&7,GroundFloor,SandakanCommercialCenter,BandarMaju,Batu1½,JalanUtara,90000Sandakan,Sabah

MailingAddress:-LockedBag44,90009Sandakan,Sabah

TMpointKeningau CommercialCentre,JalanArusap,OffJalanMasak,BlokB7,Lot13&14,89007Keningau,Sabah

TMpointBeaufort ChoongStreet,P.O.Box269,89807Beaufort,Sabah

TMpointKudat LotNo.3,JayaShoppingCenter,JalanDatu,89050Kudat,Sabah

TMpointLabuan BangunanTM,JalanDewan,87000WilayahPersekutuanLabuan

SARAWAK TMpointBatuLintang JalanBatuLintang,93200Kuching,Sarawak

TMpointPadangMerdeka GroundFloor,BangunanYayasanSarawak,Lot2,Section24,JalanBarrack/Masjid,93000Kuching,Sarawak

TMpointPending JalanGedong,93450Pending,Sarawak

TMpointSriAman JalanClub,95000SriAman,Sarawak

TMpointMiri JalanPos,98000Miri,Sarawak

TMpointLimbang JalanKubu,98700Limbang,Sarawak

TMpointLawas JalanPunang,98850Lawas,Sarawak

TMpointBintulu No.7,MedanSentralCommercialCentre,JalanTanjungKidurong,9700Bintulu,Sarawak

TMpointSibu PersiaranBrooke,96000Sibu,Sarawak

TMpointSarikei JalanBerek,96100Sarikei,Sarawak

TMpointKapit JalanKapitByPass,96800Kapit,Sarawak

396




TM WHOLESALE

Level14,NorthWingMenaraTMJalanPantaiBaharu50672KualaLumpurMalaysiaTel : 03-22404499Fax : 03-22408590Website : www.tm.com.my

Fiberail Sdn Bhd7thFloor,WismaTMJalanDesaUtamaPusatBandarTamanDesa58100KualaLumpurTel : 03-79809696Fax : 03-79809900Website : www.fiberail.com.my

Fibrecomm Network (M) Sdn BhdLevel37,MenaraTMJalanPantaiBaharu50672KualaLumpurMalaysiaTel : +60322401843Fax : +60322405001Website : www.fibrecomm.net.my

TM GLOBAL BUSINESS

Level53,SayapUtaraMenaraTMJalanPantaiBaharu50672KualaLumpurTel : 03-22405500 03-22405501Fax : 03-79560208Website : www.tm.com.my/global

TM REGIONAL OFFICES (TMRO)USATelekomMalaysia(USA)Inc8320OldCourthouseRoadSuite201Vienna,VA22182USATel : +17034675962Fax : +17034675966

UNITED KINGDOMTelekomMalaysia(UK)LimitedSt.Martin’sHouse16St.Martin’sLeGrandLondon,EC1A4EN,UKTel : +44(0)2073978579Fax : +44(0)2073978400

SINGAPORE OFFICETelekomMalaysia(S)PteLtd175aBencoolenStreet#07-09/10/11/12BurlingtonSquareSingapore189650Tel : +6565326369Fax : +6565323742

HONG KONG OFFICETelekomMalaysia(HongKong)LimitedSuite1502,15thFloorMalaysiaBuilding,50GloucesterRoadWanchai,HongKongSAR-ChinaTel : +85229920190Fax : +85229920570

397



Group Directory

SUPPORT BUSINESSHead OfficeLevel12,NorthWingMenaraTMJalanPantaiBaharu50672KualaLumpurTel : 03-22404869Fax : 03-79603359

Universiti Telekom Sdn BhdJalanMultimedia63000CyberjayaSelangorTel : 03-83125018 03-83125000Fax : 03-83125022Website : www.mmu.edu.my

Menara Kuala Lumpur Sdn BhdNo.2,JalanPunchakOffJalanP.Ramlee50250KualaLumpurTel : 03-20205421Fax : 03-20728409Website : www.menarakl.com.my

TMF Autolease Sdn BhdLot1,PersiaranJubliPerakSeksyen1740000ShahAlamSelangorTel : 03-55489412Fax : 03-55100286

Property ManagementLevel11,WismaTMTamanDesaJalanDesaUtama58100KualaLumpurTel : 03-79875040Fax : 03-79836390

Property OperationsMezzanineFloor,WismaTMTamanDesaJalanDesaUtama58100KualaLumpurTel : 03-79871001Fax : 03-79876006

Security ManagementLevel1,TMAnnexe2No.1,JalanPantaiJaya59200KualaLumpurTel : 03-22405499Fax : 03-22400996

398




Glossary

3GThirdGeneration

aACAlternatingCurrent

AAGAsia-AmericaGateway

ABACAuditandBusinessAssuranceCommittee

ACEAchievingCustomerExcellence

AESPAuthorisedEntrantandStand-byPerson

ALDAccessListDetermination

APCN2AsiaPacificCableNetwork2

APGAsia-PacificGateway

ARAbandonmentRate

ARDAccessReferenceDocument

ASEAsiaSubmarineExpress

ASPApplicationServiceProvider

BBBGPBroadbandforGeneralPopulation

BCMBusinessContinuityManagement

BDMBatam-Dumai-Melaka

BIGBruneiInternationalGateway

BODBoardofDirectors

BOFABasicOccupationalFirst-Aid

BPMBusinessPerformanceManagement

BPOBusinessProcessOutsourcing

BRCBoardRiskCommittee

BSCBalanceScoreCard

BSSBusinessSupportSystem

CCAMSCreditAssessmentandManagementSystems

CAPCinematicArtsProgramme

CAGRCompoundAnnualGrowthRate

CAPExCapitalExpenditure

CBC / PI1MCommunityBroadbandCentre/Pusat Internet 1Malaysia

CBECodeofBusinessEthics

CBLCommunityBroadbandLibrary

CCICommunicationsContentandInfrastructure

CDMACodeDivisionMultipleAccess

CEPCustomerExperienceProgramme

CICompetencyIndex

CMACommunicationsandMultimediaAct

CMSCreditManagementSystem

CoSClassofService

CPEOCustomerPremisesEquipmentOwnership

CRCorporateResponsibility

CRMCustomerRelationshipManagement

CSACustomerServiceAcademy

CSAsControlSelf-Assessments

CSDPContentandServiceDeliveryPlatform

CSMEConfinedSpaceMedicalExamination

CSICustomerSatisfactionIndex

CSRCorporateSocialResponsibility

CTIComputerTelephonyInformation

CUGsClosedUserGroups

CUSCNChinaUnitedStatesCableNetwork

DDBKLKualaLumpurCityHall

DCDirectCurrent

DCS 1 CLICKDigitalSubscriberLineServiceProvisioning

DDNDigitalDataNetwork

DECTDigitalEnhancedCordlessTelecommunications

DELDirectExchangeLine

DMCSDumai(Sumatera)MelakaCableSystem

DOMEDirectOverMetro-E

DOSHDepartmentofOccupationalSafety&Health

DSLDigitalSubscribersLine

DVRDigitalVideoRecording

DWDMDenseWavelengthDivisionMultiplexing

eEACEngineeringAccreditationCouncil

EAPEmployeeAssistanceProgramme

EBITDAEarningsBeforeInterest,Tax,DepreciationandAmortisation

EBMEnterpriseBusinessManagement

ECEveryoneConnects

EEIEmployeeEngagementIndex

399



Glossary

EESEmployeeEngagementSurvey

EMSEnvironmentManagementSystem

EPPsEntryPointProjects

ERMEnterpriseRiskManagement

ETPEconomicTransformationProgramme

EVPLEthernetVirtualPrivateLine

EV-DOEvolutionDataOptimised/EvolutionDataOnly

FFCCASFinancialControlsandAssuranceStatement

FCRFirstContactResolution

FCSFullChannelService

FGTCFrontlinerGoesToCustomer

FLC FederalLandCommissioner

FMAFactoriesandMachineryAct

FTPFastTrackProgramme

FTTBFibre-to-theBuilding

FTTHFibre-to-theHome

FTTS

Fibre-to-theSchool

GGESGlobalEthernetServices

GDLGoodsDrivingLicence

GDPGrossDomesticProduct

GEOPGraduateEmployabilityOutreachProgramme

GHCMGroupHumanCapitalManagement

GHGGreenhouseGas

GHPCGlobalHighPerformingCompanies

GISGeographicInformationSystem

GLCGovernment-linkedCompanies

GLTGroupLeadershipTeam

GoMGovernmentofMalaysia

GRIGlobalReportingInitiative

GTMGo-To-Market

GTGlobalTelco

GTPGovernmentTransformationProgramme

GVSGlobalVoiceSolutions

hHCSSOHumanCapitalSharedServicesOrganisation

HDHigh-definition

HEIGIPHighEndIndustriesGraduateInternshipProgramme

HIRARCHazardIdentification,RiskAssessmentandRiskControl

HSBBHighSpeedBroadband

iIaaSInfrastructure-as-a-Service

IBSIn-BuildingBroadbandService

ICIInternalControlIncident

ICOPIndustryCodeofPractice

ICPiCAREPrime

ICTInformation&CommunicationsTechnology

IDDInternationalDirectDialling

IDRIskandarDevelopmentRegion

IEPLInternationalEthernetPrivateLine

IFSInternationalFreephoneServices

IIAInstituteofInternalAuditors

IIMInstituteofIntegrityMalaysia

INCEIFInternationalCentreforEducationinIslamicFinance

INFORMSIntegratedFulfillmentOrderManagementSystem

IMFInternationalMonetaryFund

IMSIPMultimediaService

IPInternetProtocol

IPLCInternationalPrivateLeasedCircuit

IPPFInternationalProfessionalPracticesFramework

IPTVInternetProtocolTelevision

IPVPNInternetProtocolVirtualPrivateNetwork

IPVSInternationalPremiumVoiceServices

IRIncidentRate

IRUIndefeasibleRightofUse

ISCSICTSecurityComplianceScorecard

400




ISDNIntegratedServicesDigitalNetwork

ISMSInformationSecurityManagementSystem

ISPInternetServiceProvider

ISVsIndependentSoftwareVendors

ITFSInternationalTollFreeServices

ITGITGovernance

IT&NTITandNetworkTechnology

IVRInteractiveVoiceResponse

JJKHJadualKadarHarga

KKCIKeepCustomersInformed

KPIKeyPerformanceIndicator

KPKKMinistryofInformationCommunicationsandCulture

KTSKeyTelephoneSystem

LLANLocalAreaNetwork

LDULeadershipDevelopmentUnit

LOALimitofAuthority

LOBsLinesofBusiness

LPPKNNationalPopulationandFamilyDevelopmentBoard

LTELongTermEvolution

LWDsLostinWorkDays

MMACCMalaysianAnti-CorruptionCommission

MAMPUMalaysianAdministrativeModernisationandPlanningUnit

MCManagementCommittee

MCGMalaysiaCorporateGovernance

MCIMarketCompetitiveIncentive

MCMCMalaysianCommunications&MultimediaCommission

MDeCMultimediaDevelopmentCorporation

MEFMetroEthernetForum

MERSMalaysiaEmergencyResponseServices

MFAMalaysianFranchiseAssociation

MICCMinistryofInformationCommunicationsandCulture

MIDAMalaysiaIndustrialDevelopmentAuthorities

MIIMalaysianInstituteofIntegrity

MIERMalaysianInstituteofEconomicResarch

MIHRMMalaysianInstituteofHumanResourceManagement

MITIMinistryofInternationalTradeandIndustry

MKLMenaraKualaLumpur

MMPManagementandMaintenancePackage

MMORPGsMassivelyMultiplayerOnlineRole-PlayingGames

MNSMalaysianNatureSociety

MoEMinistryofEducation

MOHEMinistryofHigherEducation

MoUMemorandumofUnderstanding

MPLSMultiProtocolLabelSwitching

MqAMalaysianQualificationAgency

MSAMandatoryStandardonAccess

MSAPMandatoryStandardonAccessPricing

MSCMultimediaSuperCorridor

MSSManagedSecurityServices

MTCPMalaysianTechnicalCooperationProgramme

MTTIMeanTimetoInstall

MTTRMeanTimetoRestore

nNaCOSHNationalCouncilforOccupationalSafetyandHealth

NADOPODNotificationofAccidents,DangerousOccurrences,OccupationalPoisoning&OccupationalDisease

NBINationalBroadbandInitiative

NBNNationalBroadbandNetwork

NCSMNationalCancerSocietyMalaysia

NCSRNationalCentreforSustainabilityReporting

NFPNetworkFacilityProvider

NGNNewGenerationNetwork

401



Glossary

NIOSHNationalInstituteofOccupationalSafety&Health

NIPNationalIntegrityPlan

NKEANationalKeyEconomicArea

NKRA NationalKeyEconomicArea

NSCNationalSportsCouncil

NSPNetworkServiceProvider

NTMSP NIOSH–TMSafetyPassport

NTT ComNTTCommunicationsCorporation

NUTENationalUnionofTelecommunicationsEmployees

OOCMOperationCommitteeMeeting

OHDOccupationalHealthDoctor

OIABOfficeinaBox™

OJAsOn-the-JobAssessments

OJTOntheJobTraining

OLNOs’OtherLicensedNetworkOperator

OP/HROnPoleandHighRise

OSHAOccupationalSafetyandHealthAct

OSHEOccupationalSafety,HealthandEnvironment

OSH-MSOccupationalSafetyHazardManagementSystem

OSSOperationSupportSystem

OTTOver-the-top

PPaaSPlatformasasService

PATAMIProfitAfterTaxandMinorityInterests

PDPAPersonalDataProtectionAct

PEMANDUPerformanceManagementandDeliveryUnit

PFNPetrofibreNetwork

PIPPerformanceImprovementProgramme

PLWSPerformanceLinkedWageSystem

PMPropertyManagement

POPropertyOperations

PODPointofDelivery

POIPointofInterconnect

PoPPointofPresence

PPPPublic-PrivatePartnership

PRIPrimaryRateInterface

PqMProductivity&QualityManagement

PSTNPublicSwitchedTelephoneNetwork

PWDsPersonWithDisabilities

QqMSQualityManagementSystem

qoSQualityofService

RRFIDRadioFrequencyIdentification

RFSRequestforService

RNORegionalNetworkOperations

RVLRemoteVirtualLearning

RWORecoverableWorkOrder

SSaaSSoftware-as-aService

SAFESouthAfricaFarEastCableSystem

SAMSStreamyxActivationManagementSystem

SAT-3SouthAtlantic-3CableSystem

SBUStrategicBusinessUnit

SCCPSignalingConnectionControlPart

SCMSalesChannelManagement

SCPCSingleChannelPerCarrier

SEA-ME-WE3 (SMW3)SouthEastAsia-MiddleEast-WesternEuropeCableSystem3

SEA-ME-WE4 (SMW4)SouthEastAsia-MiddleEast-WesternEuropeCableSystem4

SHOSafety&HealthOfficers

SISystemIntegrator

SIRIMStandardsandIndustrialResearchInstituteofMalaysia

SL1MSkimLatihan1Malaysia

SLServiceLevel

SLGServiceLevelGuarantee

SMESmall&MediumEnterprise

SMILESuperbandMeaningfulInteractionLeadingtoExcellence

402




SMSShortMessagingSystem

SMUSecurityManagementUnit

SNISingleNumberIdentifier

SOSupervisingOfficers

SOCServiceOperationCentre

SOHOSmallOfficeHomeOffice

SPSubsidiariesPolicy

SRMSupplierRelationshipManagement

SSAISecurityServiceAvailabilityIndex

SSqSSmartSchoolQualificationStandards

SUTESabahUnionofTelekomMalaysiaBerhadEmployees

SUTENSabahUnionofTelecommunicationsEmployees

TTATechnicalAcademy

TADTMpointAuthorisedDealer

TDMTime-DivisionMultiplexing

TITransparencyIndex

TMCCTMConventionCentre

TMFATMFAutoleaseSdnBhd

TMOWTMpointonWheels

TMUCTMUniFiCentre

TM MDSTMMediaDeliveryService

TMTCTMTrainingCentre

TOMSTNBOutageManagementSystem

TOPTowardsOperationalPerfection

TPxTelePresenceExchange

TSCLTechnicalSpecialistCareerLadder

TSRTotalReturntoShareholders

TWPTeamingWithPassion

UUCUnifiedCommunications

USPUniversalServiceProvision

USP BBPCUniversalServiceProvisionBroadbandPC

UTESUnionofTelekomMalaysiaBerhadEmployeesSarawak

VVASValueAddedServices

VDPVendorDevelopmentProgramme

VDSL2VeryHighSpeedDigitalSubscriberLine

VODVideoonDemand

VoIPVoiceoverInternetProtocol

VPNVirtualPrivateNetwork

WWANWideAreaNetwork

WFFCWorldFreestyleFootballChampionships

WiFiWirelessFidelity

WSEWholesaleEthernet

yYTMYayasanTM

ZZBCZoneBusinessCouncil

403



NOTICE IS HEREBY GIVEN THATtheTwenty-EighthAnnualGeneralMeeting(28thAGM)oftheCompanywillbeheldatKristalHall,TMConventionCentre,MenaraTM,JalanPantaiBaharu,50672KualaLumpur,MalaysiaonTuesday,7May2013at10:00a.m.forthefollowingpurposes:

As Ordinary Business

1. ToreceivetheAuditedFinancialStatementsforthefinancialyearended31December2012togetherwiththeReportsoftheDirectorsandAuditorsthereon.

Please refer to Explanatory Note A

2. To declare a final single-tier dividend of 12.2 sen per ordinary share in respect of the financial year ended31December2012. (Ordinary Resolution 1)

3. To re-elect Dato’ Fauziah Yaacob, who retires pursuant to Article 98(2) of the Company’s Articles of Association.Please refer to Explanatory Note B (Ordinary Resolution 2)

4. Tore-electthefollowingDirectors,whoretirepursuanttoArticle103oftheCompany’sArticlesofAssociation:(i) DatukBazlanOsman (Ordinary Resolution 3)(ii) TunkuDato’MahmoodFawzyTunkuMuhiyiddin (Ordinary Resolution 4)(iii) Dato’IrAbdulRahimAbuBakar (Ordinary Resolution 5)(iv) IbrahimMarsidi (Ordinary Resolution 6)

Please refer to Explanatory Note C

5. Tore-appointDato’DanapalanT.PVinggrasalam,whoretirespursuanttoSection129(2)oftheCompaniesAct,1965. Please refer to Explanatory Note D (Ordinary Resolution 7)

6. Tore-appointMessrsPricewaterhouseCoopers(PwC)havingconsentedtoactasAuditorsoftheCompanyforthefinancialyearending31December2013andtoauthorisetheDirectorstofixtheirremuneration. (Ordinary Resolution 8)

Please refer to Explanatory Note E

7. ToapprovethefollowingDirectors’Fees:(i) Increase in Directors’ Fees amounting to RM276,000 per annum for the Non-Executive Chairman, RM180,000

perannumfortheNon-ExecutiveDirector;andintroductionofSenior IndependentDirector’sfeeofRM27,000perannumeffectivefrom1January2012. (Ordinary Resolution 9)

(ii) PaymentofDirectors’FeesamountingtoRM1,923,000forthefinancialyearended31December2012.Please refer to Explanatory Note F (Ordinary Resolution 10)

nOTiCe OFannUaLGeneRaL MeeTinG

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AGM Informationwww.tm.com.my


As Special Business

8. Toconsiderandifthoughtfit,topassthefollowingResolution: ProposedRenewalofShareholders’MandateforRecurrentRelatedPartyTransactionsofaRevenueorTradingNature

(ProposedRenewalofShareholders’Mandate)

“THATinaccordancewithParagraph10.09oftheMainMarketListingRequirements(MainLR)ofBursaMalaysiaSecuritiesBerhad(BursaSecurities),approvalbeandisherebygivenfortheCompanyand/oritssubsidiariestoenterintorecurrentrelatedpartytransactionsofarevenueortradingnatureassetoutinAppendixIoftheCompany’sCirculartoShareholdersdated12April2013,dispatchedtogetherwiththeCompany’s2012AnnualReport,whicharenecessaryfortheday-to-dayoperationsPROVIDED THATsuchtransactionsareenteredintointheordinarycourseofbusinessoftheCompanyand/oritssubsidiaries,arecarriedoutontermsnotmorefavourabletotherelatedpartythanthosegenerallyavailabletothepublicandarenotdetrimentaltotheminorityshareholdersoftheCompany;

THATsuchapprovalshallcontinuetobeinfullforceandeffectuntil:(i) theconclusionofthenextannualgeneralmeetingoftheCompanyatwhichtimetheauthoritywilllapse,unlessthe

authorityisrenewedbyaresolutionpassedatsuchgeneralmeeting;(ii) theexpirationoftheperiodwithinwhichtheCompany’snextannualgeneralmeetingisrequiredtobeheldunder

Section143(1)oftheCompaniesAct,1965(Act)(butshallnotextendtosuchextensionasmaybeallowedpursuanttoSection143(2)oftheAct);or

(iii) revokedorvariedbyresolutionpassedbytheshareholdersoftheCompanyatageneralmeeting,

whicheverisearlier;

AND THATtheBoardofDirectorsoftheCompanybeandisherebyempoweredandauthorisedtodoorprocuretobedoneallacts,deedsandthings(includingexecutingsuchdocumentsunderthecommonsealinaccordancewiththeprovisionsoftheArticlesofAssociationoftheCompany,asmayberequired)togiveeffecttotheProposedRenewalofShareholders’Mandate.” (Ordinary Resolution 11)

9. TotransactanyotherbusinessoftheCompanyofwhichduenoticehasbeenreceived.

FURTHER NOTICE IS HEREBY GIVEN THATforthepurposeofdeterminingaMemberwhoshallbeentitledtoattend,speakandvoteatthis28thAGM,theCompanyshallberequestingBursaMalaysiaDepositorySdnBhd(BursaDepository)inaccordancewithArticle74(3)(a)oftheCompany’sArticlesofAssociationandSection34(1)oftheSecuritiesIndustry(CentralDepositories)Act1991 (SICDA)to issueaGeneralMeetingRecordofDepositors (ROD)asat26April2013.OnlyadepositorwhosenameappearsontheRegisterofMembers/RODasat26April2013shallbeentitledtoattendthesaidmeetingorappointproxiestoattend,speakandvoteonhis/herbehalf.

NOTICE ON ENTITLEMENT AND PAYMENT OF FINAL DIVIDENDNOTICE IS ALSO HEREBY GIVEN THAT subject to the approval of Members at the 28th AGM to be held on 7 May 2013, afinal single-tier dividend of 12.2 sen per ordinary share for the financial year ended 31 December 2012 will be paid on27May2013toDepositorswhosenamesappearintheRODon10May2013.

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AGM Information www.tm.com.my

Notice of Annual General Meeting

FURTHER NOTICE IS HEREBY GIVEN THATaDepositorshallqualifyforentitlementtothedividendonlyinrespectof:(i) SharesdepositedintotheDepositor’sSecuritiesAccountbefore12:30p.m.on8May2013(inrespectofshareswhichare

exemptedfromMandatoryDeposit);(ii) Shares transferred into the Depositor’s Securities Account before 4:00 p.m. on 10 May 2013 (in respect of Ordinary

Transfers);and(iii) SharesboughtonBursaSecuritiesonacumentitlementbasisaccordingtotheRulesoftheBursaSecurities.

ShareholdersareremindedthatpursuanttoSICDA,allsharesnotdepositedwithBursaDepositoryby12:30p.m.on1December1998 and not exempted from Mandatory Deposit, have been transferred to the Ministry of Finance (MOF). Accordingly, thedividendforsuchundepositedshareswillbepaidtoMOF.

By Order of the Board

IdrusIsmail(LS0008400)HamizahAbidin(LS0007096)ZaitonAhmad(MAICSA7011681)Secretaries

KualaLumpur12April2013

NOTES:

Proxy and/or Authorised Representatives

1. A Member entitled to attend, speak and vote at theMeeting is entitled to appoint a proxy to attend, speakandvoteinhis/herstead.AproxyorrepresentativemaybutneednotbeaMemberof theCompany.AMembermay appoint any person to be his/her proxy withoutrestrictiontotheproxy’squalificationandtheprovisionsofSection149(1)(a)and(b)oftheActshallnotapplytotheCompany.

2. A Member shall not be entitled to appoint more thantwo(2)proxiestoattend,speakandvoteattheMeetingprovided that where a Member of the Company is anauthorised nominee as defined in accordance with theprovisionsofSICDA,itmayappointatleastone(1)proxybut not more than two (2) proxies in respect of eachsecurities account it holds with ordinary shares in theCompany standing to the credit of the said securitiesaccount.

Where a Member is an exempt authorised nomineewhichholdsordinarysharesintheCompanyformultiplebeneficialownersinone(1)securitiesaccount(omnibusaccount),thereshallbenolimittothenumberofproxieswhich the exempt authorised nominee may appoint inrespectofeachomnibusaccountitholds.

3. Where a Member appoints two (2) proxies, theappointmentsshallbeinvalidunlesstheproportionsoftheholdingstoberepresentedbyeachproxyisspecified.

4. The instrument appointing a proxy shall be in writingunder the hand of the appointer or his attorney dulyappointedunderaPowerofAttorneyorifsuchappointeris a corporation, either under its common seal orunderthehandofanofficerorattorneydulyappointedunder a Power of Attorney. If the proxy form is signedunder the hand of an officer duly authorised, it shouldbe accompanied by a statement reading “signed asauthorised officer under an Authorisation Documentwhich is still in force, and no notice of revocation hasbeen received”. If the proxy form is signed under theattorney duly appointed under a Power of Attorney, itshouldbeaccompaniedbyastatementreading“signedunder a Power of Attorney which is still in force, andno notice of revocation has been received”. A copy ofthe Authorisation Document or the Power of Attorney,which should be valid in accordance with the laws ofthejurisdictioninwhichitwascreatedandisexercised,shouldbeenclosedwiththeproxyform.

406




5. Acorporationwhich isaMember,maybyresolutionofits Directors or other governing body authorises suchpersonasitthinksfittoactasitsrepresentativeattheMeeting,inaccordancewithArticle92oftheCompany’sArticlesofAssociation(AA).

6. The instrument appointing the proxy together with thedulyregisteredPowerofAttorneyreferredto inNote4above,ifany,mustbedepositedattheofficeoftheShareRegistrars, Tricor Investor Services Sdn Bhd, Level 17,The Gardens North Tower, Mid Valley City, LingkaranSyed Putra, 59200 Kuala Lumpur, Malaysia not lessthan48hoursbeforethetimeappointedforholdingtheMeetingoranyadjournmentthereof.

7. ExplanatoryNoteA The Agenda item is meant for discussion only as the

provisionofSection169(1)oftheActdoesnotrequiretheauditedfinancialstatementstobeformallyapprovedbytheshareholders.Assuch, this itemisnotput forwardforvoting.

8. ExplanatoryNotesBandC Dato’ Fauziah Yaacob, Datuk Bazlan Osman, Tunku

Dato’MahmoodFawzyTunkuMuhiyiddin,Dato’IrAbdulRahimAbuBakarandIbrahimMarsidiarestandingforre-election as Directors of the Company and beingeligible,haveoffered themselves for re-electionat this28thAGM.

The Board has conducted an assessment on theindependence of the independent directors who areseekingre-electionandre-appointmentatthis28thAGMoftheCompanyandissatisfiedthattheincumbentshavecompliedwith the independencecriteriaappliedby theCompany.

Detailsof theassessmentonall thedirectorsstandingforre-electionandre-appointmentareonpages100and101inclusive,oftheStatementonCorporateGovernanceinthe2012AnnualReport.

9. ExplanatoryNoteD There-appointmentofDato’DanapalanT.PVinggrasalam,

whohasattainedtheageof70years,asaDirectoroftheCompany toholdofficeuntil theconclusionof thenextannualgeneralmeeting,shalltakeeffectiftheproposedOrdinaryResolution7ispassedbyamajorityofnotlessthanthree-fourthsofsuchmembersasbeingentitledtovoteinpersonor,whereproxiesareallowed,byproxyatthis28thAGMofwhichnotlessthan21days’noticehasbeengiven.

10. ExplanatoryNoteE TheAuditCommitteeandtheBoardhaveconsideredthe

re-appointmentofPwCasAuditorsoftheCompanyandcollectivelyagreedthatPwChasmettherelevantcriteriaprescribedbyParagraph15.21oftheMainLR.

11. ExplanatoryNoteF TheproposedOrdinaryResolution9isinaccordancewith

Article99(3)oftheCompany’sAAandifpassed,shallbeeffectivefrom1January2012.TheproposedincreaseinDirectors’ Fees and introduction of Senior IndependentDirector’s (SID) fee are to reflect the increase inresponsibilities of the Non-Executive Chairman, Non-ExecutiveIndependentDirectorsandSID.

ExPLANATORY NOTES ON SPECIAL BUSINESS

12. ProposedRenewalofShareholders’Mandate The proposed Ordinary Resolution 11, if passed, will

authorise theCompanyand/or itssubsidiaries toenterinto recurrent related party transactions with relatedparties in the ordinary course of business which arenecessary for the Group’s day-to-day operations andare on normal commercial terms not more favourableto the related parties than those generally available tothepublicandshalllapseattheconclusionofthenextannualgeneralmeetingunlessauthorityforitsrenewalis obtained from shareholders of the Company at ageneralmeeting.

Detailed information on the Proposed Renewal ofShareholders’ Mandate is set out in Appendix I of theCircular to Shareholders dispatched together with theCompany’s2012AnnualReport.

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AGM Information www.tm.com.my

PURSUANT TO PARAGRAPH 8.27(2) OF THE MAIN MARKET LISTING REqUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD

ThefollowingareDirectorsretiringpursuanttoArticles98(2)and103oftheCompany’sArticlesofAssociationandSection129oftheCompaniesAct,1965(Act):

1. Article98(2):Retirementafterappointmenttofillcasualvacancy Dato’FauziahYaacob

2. Article103:Retirementbyrotation(i) DatukBazlanOsman(ii) TunkuDato’MahmoodFawzyTunkuMuhiyiddin(iii) Dato’IrAbdulRahimAbuBakar(iv) IbrahimMarsidi

3. Section129oftheAct:Re-appointmentofDirector Dato’DanapalanT.PVinggrasalam

TheprofilesoftherespectiveDirectorswhoarestandingforre-election(asperOrdinaryResolutions2to6)andre-appointment(asperOrdinaryResolution7)asstatedintheNoticeof28thAGMaresetoutintheProfileoftheBoardofDirectorsonpages76to80inclusive,ofthisAnnualReport.

NoneoftheaboveDirectors,saveforDatukBazlanOsman,hasanyinterestinthesecuritiesoftheCompany.Thesecurities’holdingsofDatukBazlanOsmanaredisclosedonpage387ofthisAnnualReport.

STaTeMenT aCCOMPanyinGnOTiCe OF 28Th aGM

408




TELEKOM MALAYSIA BERHAD(Company No. 128740-P)(Incorporated in Malaysia)

I/We (NAME AS PER NRIC/PASSPORT/CERTIFICATE OF INCORPORATION IN CAPITAL LETTERS)

with (NEW NRIC NO.) (OLD NRIC NO.)

(PASSPORT NO.) (COMPANY NO.)

of (FULL ADDRESS)

being a Member/Members of tElEKOM MalaYsia BERHaD (128740-P) [Company] hereby appoint

(NAME AS PER NRIC/PASSPORT IN CAPITAL LETTERS)

with (NEW NRIC NO.) (OLD NRIC NO.) (PASSPORT NO.)

of (FULL ADDRESS)

or failing him/her (NAME AS PER NRIC/PASSPORT IN CAPITAL LETTERS)


of (FULL ADDRESS)

or failing him/her, the Chairman of the Meeting, as my/our first proxy/proxies to vote for me/us on my/our behalf at the Twenty-Eighth (28th) Annual General Meeting of the Company to be held at Kristal Hall, TM Convention Centre, Menara TM, Jalan Pantai Baharu, 50672 Kuala Lumpur, Malaysia on Tuesday, 7 May 2013 at 10:00 a.m. and at any adjournment thereof.

If you wish to appoint a second proxy, please complete this section.

I/We (NAME AS PER NRIC/PASSPORT/CERTIFICATE OF INCORPORATION IN CAPITAL LETTERS)

with (NEW NRIC NO.) (OLD NRIC NO.)

(PASSPORT NO.) (COMPANY NO.)

of (FULL ADDRESS)

being a Member/Members of tElEKOM MalaYsia BERHaD (128740-P) [Company] hereby appoint

(NAME AS PER NRIC/PASSPORT IN CAPITAL LETTERS)


of (FULL ADDRESS)

or failing him/her (NAME AS PER NRIC/PASSPORT IN CAPITAL LETTERS)


of (FULL ADDRESS)

“A”

“B”

or failing him/her, the Chairman of the Meeting, as my/our second proxy/proxies to vote for me/us on my/our behalf at the 28th Annual General Meeting of the Company to be held at Kristal Hall, TM Convention Centre, Menara TM, Jalan Pantai Baharu, 50672 Kuala Lumpur, Malaysia on Tuesday, 7 May 2013 at 10:00 a.m. and at any adjournment thereof.

My/Our proxy/proxies is/are to vote as indicated below:(Please indicate with an “X” in the appropriate box against each resolution how you wish your proxy to vote. If no instruction is given, this form will be taken to authorise the proxy to vote at his/her discretion)

No. Resolutions

Proxy “A” Proxy “B”

for against for against

1. To receive the Audited Financial Statements and Reports for the financial year ended 31 December 2012 NA NA NA NA

2. Declaration of a final single-tier dividend of 12.2 sen per ordinary share – Ordinary Resolution 1

3. Re-election of Dato’ Fauziah Yaacob pursuant to Article 98(2) – Ordinary Resolution 2

4. Re-election of Datuk Bazlan Osman pursuant to Article 103 – Ordinary Resolution 3

5. Re-election of Tunku Dato’ Mahmood Fawzy Tunku Muhiyiddin pursuant to Article 103 – Ordinary Resolution 4

6. Re-election of Dato’ Ir Abdul Rahim Abu Bakar pursuant to Article 103 – Ordinary Resolution 5

7. Re-election of Ibrahim Marsidi pursuant to Article 103 – Ordinary Resolution 6

8. Re-appointment of Dato’ Danapalan T.P Vinggrasalam pursuant to Section 129 of the Companies Act, 1965 – Ordinary Resolution 7

9. Re-appointment of Messrs. PricewaterhouseCoopers as Auditors of the Company and authorisation to Directors to fix their remuneration – Ordinary Resolution 8

10. Approval on Increase in Directors’ Fees – Ordinary Resolution 9

11. Approval of Payment of Directors’ Fees 2012 – Ordinary Resolution 10

12. Special Business:(i) Proposed Renewal of Shareholders’ Mandate – Ordinary Resolution 11

No. of ordinary shares held CDs account No. of the authorised Nominee*

*Applicable to shares held under nominee account only

Signed this day of 2013.

Signature(s)/Common Seal of Member(s)

NOtEs:

Proxy and/or authorised Representatives1. A Member entitled to attend, speak and vote at the Meeting is entitled to appoint a proxy to attend, speak

and vote in his/her stead. A proxy or representative may but need not be a Member of the Company. A Member may appoint any person to be his/her proxy without restriction to the proxy’s qualification and the provisions of Section 149(1)(a) and (b) of the Companies Act, 1965 shall not apply to the Company.

2. A Member shall not be entitled to appoint more than two (2) proxies to attend, speak and vote at the Meeting provided that where a Member of the Company is an authorised nominee as defined in accordance with the provisions of the Securities Industry (Central Depositories) Act 1991 (SICDA), it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each securities account it holds with ordinary shares in the Company standing to the credit of the said securities account.

Where a Member is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (omnibus account), there shall be no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

3. Where a Member appoints two (2) proxies, the appointments shall be invalid unless the proportions of the holdings to be represented by each proxy is specified.

4. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly appointed under a Power of Attorney or if such appointer is a corporation, either under its common seal or under the hand of an officer or attorney duly appointed under a Power of Attorney. If the proxy

form is signed under the hand of an officer duly authorised, it should be accompanied by a statement reading “signed as authorised officer under an Authorisation Document which is still in force, and no notice of revocation has been received”. If the proxy form is signed under the attorney duly appointed under a Power of Attorney, it should be accompanied by a statement reading “signed under a Power of Attorney which is still in force, and no notice of revocation has been received”. A copy of the Authorisation Document or the Power of Attorney, which should be valid in accordance with the laws of the jurisdiction in which it was created and is exercised, should be enclosed with the proxy form.

5. A corporation which is a Member, may by resolution of its Directors or other governing body authorises such person as it thinks fit to act as its representative at the Meeting, in accordance with Article 92 of the Company’s Articles of Association.

6. The instrument appointing the proxy together with the duly registered Power of Attorney referred to in Note 4 above, if any, must be deposited at the office of the Share Registrars, Tricor Investor Services Sdn Bhd, Level 17, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur, Malaysia not less than 48 hours before the time appointed for holding the Meeting or any adjournment thereof.

Members entitled to attend7. For the purpose of determining a member who shall be entitled to attend the 28th AGM, the Company shall

be requesting Bursa Malaysia Depository Sdn Bhd in accordance with Article 34(3) of the Company’s Articles of Association and Section 34(1) of the SICDA, to issue a General Meeting Record of Depositors (ROD) as at 26 April 2013. Only a depositor whose name appears on the Register of Members/ROD as at 26 April 2013 shall be entitled to attend, speak and vote at the said meeting or appoint proxy/proxies to attend and/or vote on his/her behalf.

For appointment of two proxies, percentage of shareholdings to be represented by the respective proxies must be indicated below:

Percentage (%)Proxy “A”Proxy “B”total 100%

(Before completing the form, please refer to the notes overleaf)

PROXy FORM

3. Fold this flap for sealing

2. Then fold here

1. Fold here

tHE sHaRE REGistRaRstRiCOR iNVEstOR sERViCEs sDN BHDLevel 17, The Gardens North TowerMid Valley City, Lingkaran Syed Putra59200 Kuala LumpurMalaysia

AFFIXSTAMP

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TM EA 2010

Documents

Transcript of TM EA 2010