09:17     PCCW<00008> - Announcement & Resumption of Trading (1)              

    The Stock Exchange of Hong Kong Limited takes no responsibility for       
    the contents of this announcement, makes no representation as to its      
    accuracy or completeness and expressly disclaims any liability            
    whatsoever for any loss howsoever arising from or in reliance upon        
    the whole or any part of the contents of this announcement.               
                                                                              
    PCCW Limited                                                              
                                                                              
    (Incorporated in Hong Kong with limited liability)                        
                                                                              
    (Stock Code: 0008)                                                        
                                                                              
    CHINA NETWORK COMMUNICATIONS                                              
    GROUP CORPORATION                                                         
                                                                              
    ISSUE OF NEW SHARES TO                                                    
    CHINA NETWORK COMMUNICATIONS GROUP CORPORATION                            
    CONNECTED TRANSACTIONS: GRANTING OF ANTI-DILUTION RIGHTS                  
                                                                              
                                                                              
    On 19 January 2005, China Netcom and the Subscriber entered into          
    a Subscription Agreement with the Company. Pursuant to the                
    Subscription Agreement, the Subscriber conditionally agreed to            
    subscribe for 1,343,571,766 new Shares at a price of HK$5.90 per          
    Share.                                                                    
                                                                              
    The Subscription Shares represent approximately 25% of the Company's      
    existing issued share capital and approximately 20% of the Company's      
    issued share capital as enlarged by the allotment and issue of the        
    Subscription Shares. Under the terms of the Subscription Agreement,       
    China Netcom has been granted certain rights. These rights, which         
    include the right to nominate three Directors and China Netcom's          
    Anti-Dilution Rights, are summarised below.                               
                                                                              
    The proceeds of the Subscription will be approximately HK$7,927           
    million before deduction of expenses, and will strengthen the             
    financial position of the Group. Subject to the Group's capital           
    investment procedures and the identification of appropriate               
    investment opportunities, the Company intends to invest up to HK$5        
    billion of these proceeds in telecommunications opportunities in the      
    PRC. The remainder will be used for reducing the Group's debt and         
    general corporate purposes.                                               
                                                                              
    Each of the PCCW Substantial Shareholders (which together will hold       
    approximately 25.5% of the issued share capital of the Company as         
    enlarged by the allotment and issue of the Subscription Shares) has       
    entered into a shareholders' agreement with China Netcom. Under these     
    shareholders' agreements each of the PCCW Substantial Shareholders        
    and China Netcom have agreed on certain matters relating to the           
    Company and their respective shareholding interests in the Company        
    (some of which are conditional on Completion).                            
                                                                              
    Approval of the Independent Shareholders will be sought for the           
    increase of the authorised share capital of the Company, the issue of     
    the Subscription Shares to the Subscriber and for the Anti-Dilution       
    Rights described below. A circular containing further details of          
    these matters and a notice convening an extraordinary general meeting     
    of the Company will be despatched to Shareholders in due course.          
                                                                              
    At the request of the Company, trading of the Shares was suspended        
    at 09:30 a.m. on 20 January 2005 pending the release of this              
    announcement. An application has been made to the Stock Exchange for      
    resumption of trading of the Shares with effect from 9:30 a.m. on 21      
    January 2005.                                                             
                                                                              
                                                                              
    INTRODUCTION                                                              
    The Company announced on 14 December 2004 that the Company had            
    received from China Netcom an expression of interest in subscribing       
    for new Shares in the capital of the Company.                             
                                                                              
    The Directors are pleased to announce that, following further             
    discussions, China Netcom and the Subscriber entered into a               
    Subscription Agreement with the Company pursuant to which the             
    Subscriber has conditionally agreed to subscribe for new Shares           
    amounting to approximately 20% of the enlarged issued share capital       
    of the Company.                                                           
                                                                              
    SUBSCRIPTION AGREEMENT DATED 19 JANUARY 2005                              
    Parties                                                                   
    The parties to the Subscription Agreement are:                            
    (1)                                                                       
    China Netcom;                                                             
    (2)                                                                       
    the Subscriber; and                                                       
    (3)                                                                       
    the Company.                                                              
    China Netcom and the Subscriber                                           
    China Netcom is principally engaged in the provision of