11:11     CHINA UNICOM<00762> - Announcement (7)                              

    the annual lease fee for the New CDMA Lease shall not exceed the cap      
    of RMB10,017 million (HK$9,440 million) and RMB13,523 million             
    (HK$12,744 million), respectively.                                        
                                                                              
    The cap referred to above is determined with reference to:                
    (a)                                                                       
    the previous amount of CDMA business income; and                          
    (b)                                                                       
    the potential growth of the Group's CDMA business income. Since the       
    commencement of the CDMA operations in 2002, the number of the            
    Company's CDMA subscribers has increased notably. It is expected that     
    CDMA subscribers will continue to increase, which is consistent with      
    the improving CDMA Network quality and successful marketing               
    strategies. The number of the Group's CDMA subscribers increased from     
    7.13 million as at 31 December 2002 to 27.81 million as at 31             
    December 2004.                                                            
                                                                              
    (B)                                                                       
    New Comprehensive Services Agreement                                      
    (i)                                                                       
    Pursuant to an agreement dated 24 March 2005 (the New Comprehensive       
    Services Agreement), Unicom Group agrees to (by itself or through         
    subsidiaries of Unicom Group) enter into various services                 
    arrangements with the A Share Company, including the supply of            
    telephone cards, procurement of equipment, interconnection                
    arrangements, roaming arrangements, mutual provision of premises,         
    leasing of transmission channels, the use of international                
    telecommunication network gateway and leasing of satellite capacity       
    on the basis that the A Share Company will have the right to transfer     
    its rights and obligations under the agreement to the New Operating       
    Entity. Unicom Group agrees to supply (by itself or through               
    subsidiaries of Unicom Group) services to the A Share Company on          
    arm's length terms and on terms no less favourable than the terms of      
    its supply of services to any member of Unicom Group or any other         
    independent third party. Completion of the agreement is subject to,       
    inter alia, the approval of the A Share Company's independent             
    shareholders. The agreement provides that the initial term shall be       
    two years commencing from 1 January 2005 and is renewable for terms       
    of two years at the option of the New Operating Entity.                   
                                                                              
    (ii)                                                                      
    Pursuant to a transfer agreement dated 24 March 2005, the A Share         
    Company agrees to transfer to the New Operating Entity all of its         
    rights and obligations under the New Comprehensive Services               
    Agreement. Under the transfer agreement, the A Share Company will         
    cease to be a party to the New Comprehensive Services Agreement and       
    the New Operating Entity will become a party to it in place of the A      
    Share Company. Following the transfer, the New Operating Entity will      
    exercise and enjoy all the rights of the A Share Company arising          
    under the New Comprehensive Services Agreement as if the New              
    Operating Entity had at all times been a party to the New                 
    Comprehensive Services Agreement. Completion of the transfer              
    agreement is subject to, inter alia, Independent Shareholders'            
    approval.                                                                 
                                                                              
    (1)                                                                       
    Supply of telephone cards                                                 
    Background                                                                
    Under the New Comprehensive Services Agreement, Unicom Group will,        
    through its 95% owned subsidiary, Unicom Xingye (or other                 
    subsidiaries of Unicom Group) provide various kinds of telephone          
    cards, including SIM cards, UIM cards, IP telephone cards and             
    rechargeable calling cards, for the New Operating Entity's various        
    networks. Unicom Group shall ensure that the quality of its telephone     
    cards comply with the standards of the government authorities.            
                                                                              
    Pricing standards                                                         
                                                                              
    Charges for the supply of these cards are based on the actual cost        
    (including cost of import of specific telephone cards, manufacturing      
    cost and cost of issuing specific telephone cards) incurred by Unicom     
    Xingye or other subsidiaries of Unicom Group in supplying the cards       
    together with a margin over cost to be agreed from time to time but       
    in any case not to exceed 20 per cent. of the cost, and subject to        
    appropriate volume discounts. Under the New Comprehensive Services        
    Agreement, prices and volumes will be reviewed by the parties on an       
    annual basis.                                                             
                                                                              
    Historical information                                                    
    For each of the years ended 31 December 2002, 2003 and 2004, the          
    Group paid approximately RMB877 million (HK$827 million), RMB1,187        
    million (HK$1,119 million) and RMB1,088 million (HK$1,025 million)        
    respectively, to Unicom Xingye, for purchase of telephone cards           
    pursuant to the Old Comprehensive Services Agreement.                     
                                                                              
    No Cap Amount                                                             
    The Company considers that the transaction value of the supply of         
    telephone cards shall not be subject to any annual cap amount for the     
    following reasons:                                                        
                                                                              
    The Group provides telecommunication services in the PRC and its          
    revenue depends heavily on the sales of these telephone cards. Sales      
    of these telephone cards is also instrumental for the Group to            
    increase its subscriber base; growth in the Group's subscribers           
    number will in turn increase the demand of the Group for these