09:21     PCCW<00008> - Announcement (2)                                      

    Shares pursuant to the exercise of China Netcom's Anti-Dilution           
    Rights will, nevertheless, be subject to certain conditions as            
    follows:                                                                  
                                                                              
    (1)                                                                       
    the pricing of any new Shares, securities convertible or                  
    exchangeable into Shares or any warrants or other rights to subscribe     
    for Shares issued or proposed to be issued by the Company and in          
    respect of which China Netcom is entitled to exercise its                 
    Anti-Dilution Rights (`Relevant Securities') in respect of which          
    China Netcom has indicated that it will exercise its Anti-Dilution        
    Rights must be approved by the Directors, including the independent       
    non-executive Directors, who do not have a direct interest in the         
    transaction and who are not connected with China Netcom or the PCCW       
    Substantial Shareholders;                                                 
                                                                              
    (2)                                                                       
    where Relevant Securities are to be issued to China Netcom at a           
    discount of more than 10% to the benchmark price, such benchmark          
    price being the higher of:                                                
                                                                              
    (a)                                                                       
    the closing price on the date of the relevant agreement relating to       
    the proposed issue of securities; and                                     
                                                                              
    (b)                                                                       
    the average closing price in the five trading days immediately prior      
    to the earlier of:                                                        
                                                                              
    (i)                                                                       
    the date of announcement of the proposed transaction or arrangement       
    involving the proposed issue of securities;                               
                                                                              
    (ii)                                                                      
    the date of the relevant agreement relating to the proposed issue of      
    securities; and                                                           
                                                                              
    (iii)                                                                     
    the date on which the placing or subscription price for the proposed      
    issue of securities is fixed,                                             
                                                                              
    an independent financial adviser's opinion on the fairness of the         
    price or value at which the Relevant Securities are to be issued to       
    China Netcom will be required, in addition to the Directors' approval     
    described above, and the Company will be required to include              
    reference to this opinion in any announcement to be issued by it in       
    relation to the issue of Relevant Securities to China Netcom; and         
                                                                              
    (3)                                                                       
    where Relevant Securities are to be issued to China Netcom at a           
    discount of 20% or more to the benchmark price, the approval of           
    independent Shareholders will be required in advance of such issue.       
                                                                              
                                                                              
    However, the Directors do not expect that these conditions will           
    overly complicate or delay any fund raising exercises and share           
    issuances that the Company may undertake in the future (in contrast       
    to the treatment of the PCCW Substantial Shareholders' Anti-Dilution      
    Rights).                                                                  
                                                                              
    CIRCULAR TO SHAREHOLDERS                                                  
    As a result of the Supplemental Arrangements and the treatment of         
    China Netcom's Anti-Dilution Rights under the Listing Rules, neither      
    the Subscription nor any of the ancillary arrangements relating           
    thereto constitute connected transactions of the Company. Therefore,      
    neither the board committee referred to in the Announcement               
    (consisting of the independent non-executive directors of the             
    Company) formed to advise the Independent Shareholders in connection      
    with the Anti-Dilution Rights nor the independent financial adviser       
    appointed to advise this committee will be required.                      
                                                                              
    The Company will issue a circular to Shareholders containing further      
    details of the Subscription, together with a notice convening an          
    extraordinary general meeting of the Company to consider a resolution     
    to approve the increase of the authorised share capital of the            
    Company, the issue of the Subscription Shares, and China Netcom's         
    Anti-Dilution Rights. The Stock Exchange have confirmed to the            
    Company that no Shareholder will be required to abstain from voting       
    at the EGM and therefore that all Shareholders (including the PCCW        
    Substantial Shareholders) will be able to vote on the resolution. The     
    circular will be dispatched as soon as practicable.                       
                                                                              
    Shareholders and potential investors should note that the                 
    Subscription is subject to a number of conditions precedent and           
    therefore may or may not be completed. Shareholders and potential         
    investors are reminded to exercise caution when dealing in the            
    securities of the Company.                                                
                                                                              
                                                                              
    By the Order of the Board                                                 
    PCCW Limited                                                              
    Hubert Chak                                                               
    Company Secretary