Telekom Malaysia Pays $232 Million To Deutsche Telekom Unit

KUALA LUMPUR -(Dow Jones)- Government-controlled Telekom Malaysia said late Friday it has paid $232 million to DeTeAsia Holding, a unit of Deutsche Telekom, after it lost a dispute over a contract.

Last year, the International Court of Arbitration ruled that Telekom Malaysia's unit Celcom should pay DeTeAsia $177.2 million plus interest. Telekom Malaysia is one of the country's top five companies in market capitalization terms.

DeTeAsia had started arbitration proceedings against Celcom in March 2003, claiming damages plus interest for breach of an agreement related to the sale of Celcom to Telekom and the subsequent merger of Telekom's cellular unit with Celcom in 2003.

"This payment was made under protest and with full reservation of Celcom's rights," Telekom Malaysia said in a statement to the local stock exchange.

Telekom Malaysia said the payment was made Jan. 27 via a U.K. court that had earlier issued an order prohibiting Celcom from removing any of its U.K. assets worth up to $232 million.

The payment will reduce Telekom Malaysia's net tangible asset value by MYR0.26 a share to MYR4.12, Telekom Malaysia said.

"There is no operational impact on Telekom Malaysia Group arising from this payment to DeTeAsia," Telekom Malaysia said.

Telekom Malaysia said Celcom has been granted an extension until Feb. 27 to file an application to set aside the court order.

Shares of Telekom Malaysia closed Friday at MYR9.75.

-By Joseph Edwin, Dow Jones Newswires; 603 2692 5254; joe.edwin@dowjones.com

(END) Dow Jones Newswires "

Posted to the site on 4th February 2006