11:12     CHINA UNICOM<00762> - Announcement (8)                              

    telephone cards. The amount of telephone cards required by the Group      
    from Unicom Xingye is directly linked to the number of the Group's        
    subscribers. Neither the Group nor Unicom Group will be able to           
    control it as it depends entirely on the size of the Group's              
    subscriber base. Any restraint imposed on the Group from obtaining        
    these telephone cards from Unicom Xingye will severely limit the          
    Group's ability to earn revenue and conduct its business in the           
    ordinary course.                                                          
                                                                              
    The Company has applied to the Hong Kong Stock Exchange for waiver        
    from the requirements under Rule 14A.35(2) of the Listing Rules for       
    imposing a cap on the supply of telephone cards for each of the           
    financial years ending 31 December 2005 and 2006.                         
                                                                              
    (2)                                                                       
    Equipment procurement services                                            
    Background                                                                
    Under the New Comprehensive Services Agreement, Unicom Group agrees       
    to provide comprehensive procurement services to the New Operating        
    Entity through Unicom I/E Co, a 95% directly owned subsidiary of          
    Unicom Group. Unicom I/E Co procures foreign and domestic                 
    telecommunications equipment and other materials required in the          
    operation of the New Operating Entity's various networks and provides     
    services on management and consultation of tenders and agency             
    services. Unicom I/E Co may commission other controlling subsidiaries     
    of Unicom Group to provide equipment procurement services.                
                                                                              
    In addition, Unicom Group has also agreed to indemnify the New            
    Operating Entity for any loss caused by any negligence, default, act      
    or omission of Unicom Group or Unicom I/E Co in respect of equipment      
    procurement under the New Comprehensive Services Agreement. The           
    aggregate liability of Unicom Group for any claim under the New           
    Comprehensive Services Agreement shall not exceed the total amount of     
    agency services fees made to Unicom Group under the New Comprehensive     
    Services Agreement.                                                       
                                                                              
    Pricing standards                                                         
    Charges for these services are calculated at the rate of:                 
    (1)                                                                       
    0.55% of the contract value of those procurement contracts under          
    US$30 million (including US$30 million) and 0.35% of the contract         
    value of those procurement contracts over US$30 million, in the case      
    of imported equipment; and                                                
                                                                              
    (2)                                                                       
    0.25% of the contract value of those procurement contracts under          
    RMB200 million (including RMB200 million) and 0.15% of the contract       
    value of those procurement contracts over RMB200 million, in the case     
    of domestic equipment.                                                    
                                                                              
    Unicom I/E Co has agreed not to charge services fees to the New           
    Operating Entity in respect of procurement of transmission and            
    auxiliary equipment of switches, dry-cell batteries, diesel oil           
    engines, non-stop power supply, air-condition in generator rooms and      
    fibre optical cables.                                                     
                                                                              
    Historical information                                                    
    For each of the years ended 31 December 2002, 2003 and 2004, the          
    Group paid an agency fee of approximately RMB13.99 million (HK$13.18      
    million), RMB17.90 million (HK$16.87 million) and RMB17.76 million        
    (HK$16.74 million) respectively, to Unicom I/E Co, for procurement        
    services of domestic and international telecommunication equipment        
    and other materials pursuant to the Old Comprehensive Services            
    Agreement.                                                                
                                                                              
    Cap Amount                                                                
    For each of the financial years ending 31 December 2005 and 2006,         
    the agency fee to be paid for equipment procurement by the New            
    Operating Entity under the New Comprehensive Services Agreement shall     
    not, in aggregate, exceed the cap of RMB40 million (HK$37.70 million)     
    and RMB45 million (HK$42.41 million) respectively.                        
                                                                              
    The caps referred to above are determined with reference to:              
    (a)                                                                       
    the previous transaction conducted and transaction amount in respect      
    of procurement of equipment by the Group;                                 
                                                                              
    (b)                                                                       
    the importance of ensuring that the needs of the Group to obtain          
    equipment necessary to its business can be satisfied at all times in      
    a cost-efficient way.                                                     
                                                                              
    (3)                                                                       
    Interconnection arrangements                                              
    Background                                                                
    Under the New Comprehensive Services Agreement, various                   
    telecommunication networks of the New Operating Entity and various        
    telecommunication networks of Unicom Group interconnect with each         
    other.                                                                    
                                                                              
    Pricing standards                                                         
    (a)                                                                       
    Settlement between the cellular network of both parties                   
    With respect to cellular calls between different provinces,