UPDATE 1-Malaysia's TMI slides ahead of rights pricing

(adds second dealer)

KUALA LUMPUR, March 2 (Reuters) - Shares of Malaysian mobile telephone company TM International TMIT.KL dropped as much as 9.27 percent on Monday as the company is expected to finalise the pricing of a rights offering in the next two weeks, dealers said.

The wider Bursa Malaysia main index .KLSE fell 1.76 percent by 0351 GMT while TM International was down 8.61 percent at 2.76 ringgit.

TM International announced last week it would raise 5.25 billion ringgit ($1.43 billion) in a rights issue to reduce debts. [ID:nKLR367693]

But the company has not yet decided on the basis of the rights issue and issue price for the rights shares.

"In the next two weeks the company will be pricing the rights based on a discount to the prevailing 5 day volume weighted average price," said a dealer from a Malaysian brokerage.

Another dealer said investors were also concerned about the potential dilution from the rights offering.

"There are concerns that the rights issue may not be enough to resolve the company's medium-term funding issue. And the market is still waiting for details on the rights offering, there are worries that the potential dilution could extend to 2010," the second dealer said.

(Reporting by Soo Ai Peng; Editing by David Chance)